Pixelon Ousts Execs, Plans on Chapter 11 Filing
The board of directors at Pixelon Corp., the Orange County online broadcast network that shocked the “dot-com” world when its founder admitted being a convicted embezzler, has forced out the company’s management team and agreed to file for bankruptcy protection.
Pixelon’s board met last week and ousted acting Chief Executive Paul Ward and at least one other top manager, according to company sources.
Peter Foley, an executive with Unified Financial Services in New York, was named interim chief executive.
Foley, Ward and other company officials could not be reached for comment Monday.
“Management is trying to raise money and kick-start the company,” said Pixelon’s bankruptcy attorney, Marc Winthrop of Winthrop Couchot in Newport Beach. “I know that the company had lined up investors, but that fell through with the bankruptcy filing.”
Pixelon officials had tried to pull together a $70-million offer in January by New York Internet broadcaster On2.com, according to reports published in the Industry Standard, a “new-economy” magazine. But the deal fell through, and Pixelon eventually fired most of its remaining employees.
The management shake-up comes just months after Pixelon burst onto the Internet scene last fall. Celebrating its launch, company founder Michael Adam Fenne used at least $10 million of the $23 million he had raised from investors to throw a lavish Las Vegas party hosted by comedian David Spade. It featured 10 performers, including the Who, Natalie Cole and Tony Bennett.
In April, authorities in Virginia announced that Fenne’s real name was David Kim Stanley and that he was a convicted felon who had bilked people out of hundreds of thousands of dollars and then failed to appear in court. Stanley had been on Virginia’s most-wanted list for three years.
Stanley surrendered to Virginia state police and is being held in a Wise, Va., jail.
Adding to the company’s troubles, three Pixelon creditors filed a petition in U.S. Bankruptcy Court in Santa Ana last month in an effort to force the company into bankruptcy.
Pixelon executives initially said they would fight the petition. But given the management change, the company said it now plans to convert the involuntary Chapter 7 liquidation petition into a voluntary Chapter 11 bankruptcy by July 17. The change in status allows Pixelon directors to remain in control of the company while developing a way to restructure the company’s debts.
Pixelon owes more than $550,000 to the three companies that tried to force it into bankruptcy.
It owes at least $525,000 to Clear, Alexander & Associates in Corona del Mar for corporate consulting work, nearly $23,000 to Snowden Electric Co. in Buena Park for electrical installation services, and nearly $4,500 to Single Source in Rancho Santa Margarita for corporate furnishings, according to court documents.
Officers at the creditor companies could not be reached for comment Monday.
