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1. VEND is still a corporate entity.
2. There are no sales of kiosks at 12-15k underway from VEND or its bankruptcy estate.
3. Whether you continue to get your payments is something to be concerned about.
4. Whether you continue to receive support is something to be very concerned about.
5. Chessler is providing zero funding.
6. The only strides that are currently being made against NY are in private litigation that will only benefit the specific plaintiffs who brought the litigation.
You were right about one thing - You're still here, and you're still amusing!
RoBo!!!!
So amusing to see you!
You said you bought 50,000 shares when VEND was trading around $0.60, but I suppose that’s fun money to a high roller like you.
Good luck with those kiosks! How many are you buying?
I miss RoBo, too, but it looks as though he won't be coming around here any more. This board claims to have 72 "followers", but fewer and fewer active participants. Pretty much you, me and Sonata, and Alvie sometimes by invitation. We need to keep him busy with posts to delete or something.
The VEND bankruptcy estate seems to be what is known in bankruptcy circles as "administratively insolvent", which is like doubly bankrupt or a bankrupt bankrupt. They don't even have the resources to pay the obligations that they have incurred post-petition, much less anything that might be distributed to pre-petition creditors. To become administratively insolvent is a big no-no, and it signifies that many of those who provided goods and services after the bankruptcy was filed, who may have assumed that they would get paid as being first in line, will not actually receive full payment (and might get stiffed entirely). Even Mr. Chessler may have cause for concern.
So, there's probably not much more fun to be had here. I guess I'll stick around and watch a while longer, since there are a few things that could be interesting, like
- what happens to the business? Does it change hands, fall apart or what? My guess is that it falls apart, since there's no money to do what it would take to salvage it, unless Chessler succeeds in a quick foreclosure before it's too late. It may already be too late.
- there was finally a securities litigation filed just prior to the bankruptcy. They named VEND as one of the defendants, together with a host of individuals including Nick, Ryan Polk and others. They just dismissed VEND as a defendant, so it looks as though they intend to proceed against the individuals.
- I imagine the bankruptcy trustee will file suit against Nick (and, perhaps, others) to recover on things like the illegal stock sale commissions, the Print Mates deal, etc. and there will be the usual avoidance actions for preference payments made prior to the bankruptcy filing. The avoidance actions will probably be boring, but the suit against Nick and friends should be good.
Not one of the franchisees made an appearance in the bankruptcy case. I would have thought that at least one of the larger ones, like in Philadelphia, or a group of them, perhaps, would have at least hired an attorney to show up and attempt to represent their interests.
They might still get lucky, but it's looking doubtful to me.
They are converting to Chapter 7 liquidation.
Not looking good for franchisees.
I agree that Nick won't be back, although at one point I suspected we'd see a straw bidder with him and his group behind it. Even that would be too much exposure for him, though, since he'll have the government and the bankruptcy trustee knocking on his door all too soon. I was just kidding that Alvie or RoBo might be able to hire Nick, since he's probably unemployed.
Speaking of bankruptcy trustee, there's a high likelihood that this thing converts to a Chapter 7 liquidation at the status conference hearing on Tuesday afternoon. $65,000 a month isn't enough to pay even a fraction of the professional fees, and with no more DIP lending, the only thing left to do is to convert to a 7.
There will be some delay appointing a bankruptcy trustee, but he'll need to get acquainted with things very quickly because Chessler will be filing a motion to lift the stay so that he can foreclose, and if a sale is going to be explored, it will need to happen before the wheels come the rest of the way off and before Chessler gets his way with foreclosure. The U.S. Trustee has probably already reached out to the prospective Chapter 7 trustee, but he still won't have much time to get up to speed.
Advantage: Chessler.
Royalties seem to be running around $65,000 a month, so someone who wanted to keep the whole thing up and running could conceivably come up with a valuation that would beat the current bottom-feeder. The problem is that the longer things go and the worse they get, the greater the risk that franchisees will throw in the towel or be unable to continue.
I don't think anyone could place any real value in the prospect of resuming manufacturing and sales - That's a lottery ticket and, given the woefully bad record of attempts at manufacturing and delivering kiosks that actually work reliably, a long-shot lottery ticket at that. What you'd have to do would be to buy it to preserve what's in place and hope to leverage the cash flow to recover your investment and to take a shot at resurrecting the rest of the business as circumstances permit.
But, hey, for a true believer like Alvie or RoBo, there's the opportunity! I don't think it would take much to outbid Mr. Chessler, and I bet Nick Yates is available, too!
Shame, shame, shame on you, VEND folks.
Based on a letter filed in the bankruptcy case, it seems that VEND may have been soliciting and accepting deposits from prospective franchisees as late as mid-October 2019.
This poor woman deposited $54,000 with VEND on October 11, only to be offered the option of converting to stock on October 25. They promised to get her money back, but never did.
She claims it was a Ponzi scheme. Hard to argue with that, at least by October 11, 2019.
Shame, shame, shame.
Well, things ain't looking so good in the bankruptcy.
It seems some folks thought that the overly generous terms that the DIP lender / bottom feeder had mandated were a little too sweet (and they were right). The DIP lender, being also a secured pre-petition lender, decided to bow out.
So, now there's no lender, no money to make the payroll that's due to be paid on Tuesday and almost no hope.
It looks as though there will either be an extremely quick sale (welcome back, bottom-feeding no-longer-DIP-lender David Chessler) or a conversion to a Chapter 7 liquidation (welcome back, bottom-feeding, no-longer-DIP-lender but still pre-petition ostensibly secured creditor David Chessler). Either way, it looks as though Mr. Chessler is positioned to pick this pile of whatever up for next to nothing, although he may find himself with a fight on his hands if/when a bankruptcy trustee is appointed.
In terms of who ends up with VEND's assets, I doubt any of this matters very much. It appears to be Chessler's if he wants it.
In terms of how much money gets distributed to creditors, none of this matters very much. No one is going to see much money, and whatever it is, it won't be coming very soon.
But, in terms of how things look for the franchisees, this seems to be very worrisome. Maybe RoBo needs to step up and buy the whole thing in order to keep his kiosks running.
VEND will probably only get $2.5 million from its bankruptcy sale.
This information has not been confirmed by VEND itself, but according to the Creditors' Committee:
- Chessler's initial bid is $2.5 million
- The process, including the terms of compensation for the proposed investment banker, is set up in such a way as to make it highly likely that Chessler will be the only bidder.
After VEND repays the DIP loan to Chessler, pays the expenses of the sale and the administration of its bankruptcy estate and pays ongoing post-petition expenses like payroll, rent, utilities, etc., there will be little or nothing to spread around among its creditors.
There's a chance that someone will come along to top Chessler's bid, but that's low, and even if someone tops it by 20%, bringing the bidding up to $3 million, you'll get the same result, since most of the difference will go to Chessler as a break-up fee.
Yeah, the guy is David Chessler out of Sarasota, Florida. He sometimes does deals with Greg Norman, but he may be doing this on his own.
He is providing the DIP financing, as you suspected. The sale is being fast-tracked, and that's one of the requirements in the terms of the DIP loan, so Chessler definitely has the inside track. Considering the period over which VEND has been marketed and the dismal results obtained, it's not surprising there's so little interest. You never know, other bidders may show up, but Chessler will be the stalking horse with a breakup fee, so he is very likely going to be the winning bidder, if not the only bidder. The sale will probably close by the end of March.
Chessler lent VEND enough money pre-petition to get them into the 11, he's advancing $500,000 in funds on the basis of interim bankruptcy court approval, and after final approval in a couple of weeks, he can advance up to a total of $2.535 million. He'll probably credit bid all of his loans and hope to pick VEND's assets up for little or nothing more than that. The creditors won't see much, and it will probably be a long while before they do.
I suppose he'll pick up Print Mates for what it's worth, which isn't much. As I said in my earlier post, the interesting question is whether he tries to force all the potential franchisees to come along for the ride. I bet he does, at least as far as the ones that ponied up funds and signed at the high end of the range for the kiosk purchase price.
VEND proposes to sell all its assets in an auction to be conducted on March 12. So far, there is only one bidder, a bottom-feeder out of Florida.
The winning bidder will have the right to designate which contracts he wants to assume and honor and which he wants VEND to reject. I suppose he'll be assuming all the franchise deals with the exception of any that are money losers (I'm looking at you, Phil Mickelson), and that probably includes deals where kiosks have not yet been delivered. I suppose that's a tricky decision, since it doesn't look as though VEND will be in a position to resume deliveries in any volume for a few more months thereafter.
I don't know whether the formal announcement of the auction is tied to the decline in the stock price, but it's highly likely the sale will move forward and it's next to impossible that it will raise enough to pay off creditors to any significant degree, much less shareholders. So, maybe reality is setting in for the shareholders.
A creditors' committee was appointed in the bankruptcy case - looks like one noteholder, two trade creditors and I'm guessing two franchisees.
Franky, here’s another way in which VEND’s planning was poor. Even if you had installed all 1500 units, the royalties would not have been adequate to cover overhead.
The problems included:
- very low margins on kiosk sales
- very poor location selection
- excessive overhead
You can’t blame those things on Flex. It was poor management.
The company’s real business plan all along was to sell franchises fast enough to collect deposits adequate to fund cash flow requirements, otherwise known as a Ponzi scheme.
Looks more like your list for Santa Claus.
Well, you were the one who correctly identified Nick's brother as the guy behind Print Mates, so you have established credibility on family relations.
Franky, this post reminds me of one you posted in reply to one of my comments. Remember this?
"I’m in the know. You are not. I will win every battle. Making you look bad."
Well, here's what I know:
- the common stock is worthless.
- the many people who were duped into making franchise deposits that were not escrowed will see next to nothing.
- the many people who had their franchise deposits placed in escrow are stuck in limbo for the time being and are unlikely to recover the return of those deposits anytime soon. And they might even be forced to accept delivery of a kiosk by the new owner whether they like it or not.
- the vendors who were foolish enough to advance credit to VEND will see next to nothing on their many unpaid debts.
- the current franchisees are at great risk during the bankruptcy process. At best, they might hope that some new owner comes in and actually runs things responsibly and doesn't let them down. At worst, they could be left with 360 cubic feet or more of worthless machinery.
- Nick will very likely be pursued in bankruptcy court for the illegal commissions on stock sales and, perhaps, for other misdeeds like the idiotic Print Mates bailout.
How's that for winning?
So, it looks like the plan is to sell VEND within the next 3 months, and it looks as though there will be at least one bidder. I suppose there are some franchisees interested in bidding as well.
In any event, within the next few months, VEND will have disposed of R&I. Maybe it can keep Print Mates and reorganize around that golden opportunity!
I thought Franky was Nick's brother, too, but a few other clues have led me to suspect that it's dear old dad.
Apple / tree?
That last-ditch capital-raising effort? Not so great.
They contacted a bunch of potential suckers. Less than half even nibbled. Of those that nibbled, NONE expressed interest.
VEND did get a few small loans here and there, just enough to string this thing out a while longer.
Less than half of the franchisee deposits that VEND collected went towards the purchase of kiosks or components.
The single biggest category of expenditure? Debt service and operating costs.
Looks like another golf-lover has his sights set on R&I.
They should have gotten rid of Nick Yates a lot sooner, right, Franky?
Who was responsible?
Nick Yates.
Not that he proved to be very responsible.
I hope some or all of the franchisees figure out how to take control of what's left in order to preserve their businesses.
There is no hope for the shareholders.
I am not aware of any link other than the PACER federal courts web site, and I can't link to that.
I guess you'll either have to take my word for it or wait for public confirmation. Typical of VEND, there doesn't seem to have been a public announcement. Maybe they told their franchisees and then maybe one of them can confirm on here.
VEND filed a bankruptcy petition in Nevada yesterday.
Phones and website are still active and professional?
That's a bullish sign for sure!
Looks like Mr. Shen has been there a while. In any event, I suspect most of those bright shiny faces on the web site are gone, eh?
VEND has become an entirely virtual company!
Or is that vapor company?
Hard to see the difference.
But it’s certainly not virtuous.
How’s the Walmart deal coming along?
A very esoteric discussion. What constitutes high volume in a stock when the market cap of the public float can't rise much above a grand total value of $2 million on a good day?
At these prices, it's the lack of volume that is arguably the most telling. Mr. Market is giving shares of VEND away for almost nothing, but buyers are not lining up.
Where's RoBo when you need him?
A little news - a new fraud lawsuit has been filed.
The only surprise is that there haven't been more of them, but I think a lot of folks have figured out that filing a lawsuit could be just throwing good money after bad.
I thought you might have left prematurely, but you know better than I. My guess is that there will still be an effort for some franchisees to take over the business once it fails completely. That just seems to me to make sense.
Alvie, you’re back as moderator!
And you are deleting your own post?
Strange turn of events.
I thought you were a true believer, so I wondered why. With you selling and Alvie leaving as moderator, it sounds as though the realization that it's over has really sunk in.
Why are you selling?
Ooh! Ooh! Can I play? Here's another question for your quiz!
When will the market cap for VEND get to the point that it's less than RoBo's total investment in kiosks and VEND shares?
Thanks for posting this, Alvie.
Even Nick Yates might be able to take a tax loss at these prices! It seems that at least some of his shares were acquired at a price of 16 cents, and I suppose he must have had to assign some value to some of his other shares for tax purposes.
There’s your silver lining, Nick!
After all, with a market cap that’s now below $4 million, Yates’ shares are worth well under $1 million (and good luck selling those shares without killing the price)! So, Nick’s shares are close to worthless and are headed rapidly in that direction. To think they were once worth over $40 million on paper.
Which long overdue filing will be made first - the Q or the 11?
My bet is on the 11. It will be Nick's holiday gift to RoBotInVaSiOn!