Buyers to Purchase Lily Robotics' Drone Blueprints, Brand Out of Bankruptcy
7 days 18 hours 55 minutes ago - DJNF
By Katy Stech
The San Francisco startup whose popular drone never made it to more than 60,000 customers will sell the blueprints to its patented technology after a judge on Thursday agreed to approve the transaction.
Judge Kevin Carey said he would sign off on the sale of Lily Robotics Inc.'s patents and brand name once the fine print on purchase agreements with two buyers is finalized. The buyers, LR Acquisition LLC and Mota Group Inc., outbid GoPro Inc. during a marathon auction last week, offering a total of $750,000.
Lily Robotics' operations went up for sale after company officials announced that they couldn't finalize a drone design with the promised functions, disappointing customers who had placed nearly $35 million worth of orders for the drone, starting in 2015. The company filed for bankruptcy in February.
Under the sale agreements, LR Acquisition offered $450,000 for the company's patents, prototypes and inventory, while Mota Group offered $300,000 for the company's trademark and customer lists.
The bankruptcy sales will put the blueprint for the failed drone "in the hands of two bidders that will be able to develop those technologies," Lily Robotics lawyer Douglas Mintz told Judge Carey at Thursday's hearing.
Lily Robotics' patents included ones that enable the operator to launch the drone by throwing it into the air and one for a flight sequence that guides it to land in the operator's hands, according to court papers filed in U.S. Bankruptcy Court in Wilmington, Del.
Lily Robotics was founded in 2013 by two University of California, Berkeley, students who said they were caught off guard by the drone's meteoric popularity. The waterproof drone was designed to be launched easily and navigate itself around objects while recording, court papers said.
The drone was named a gadget "that will change your life in 2016" by The Wall Street Journal. The idea also drew investors, including venture capitalists and former San Francisco 49ers quarterback Joe Montana.
But creating the drone took longer than its founders expected. Lily Robotics grew to 69 employees in June 2016, but "each prototype had problematic flaws that prevented [the company] from delivering the camera to the market," company lawyers said in earlier court papers.
By the end of 2016, the company still hadn't perfected the drone, and investors were unwilling to put in more money.
Lily Robotics announced plans to shut down and filed for chapter 11 protection on Feb. 27, halting a lawsuit that arose from the delayed sales. The filing gave company officials time to reach out to more than 75 potential buyers.
The sale process led to a three-day auction that ended on June 9. Throughout the auction, lawyers for GoPro made several offers, but the company was outbid in the final round, court papers said.
It's unclear how much sale money will flow to Lily Robotics' customers. Company officials said they hoped to provide full refunds to customers who come forward. They have already refunded more than $19 million, court papers show.
Write to Katy Stech at katherine.stech@wsj.com
(END) Dow Jones Newswires
June 15, 2017 16:13 ET (20:13 GMT)
