Introduction
On October 1, 2013, Nirvanix, Inc. (“Nirvanix”) filed a chapter 11 petition for bankruptcy in the United States Bankruptcy Court for the District of Delaware. Nirvanix describes itself as a provider of “enterprise-class cloud storage services.” See Declaration of Nirvanix’s CEO in Support of Chapter 11 Petition and First Day Motions at *2. Nirvanix’s cloud storage services fall in to two categories: a cloud file system and a cloud storage network. Under the Nirvanix Cloud File System, the company provides software capable of handling “millions of users and billions of files in a single global namespace.” Decl. at *2. The Nirvanix Cloud Storage Network offers eight data centers that allow customers to store data within close proximity and access certain redundancy levels for data storage. Decl. at *2-3.
In addition to data storage services, Nirvanix offers security safeguards at the user level and physical data center level. Decl. at *3. Security offerings include password, token-based authentication and encryption services. The company’s physical storage centers are located globally in “Carrier Class-III facilities” which utilize financial-grade safeguard procedures and access. Decl. at *3. The company’s eight data storage facilities are located in the U.S. and around the world. Decl. at *4.
Business Operations
Nirvanix is a privately held, Delaware corporation that has no affiliates or subsidiaries. Decl. at *4. The company began in 2007 and operates out of Mountain View, California. The company has data centers in Texas, New Jersey, California, Nevada and Hawaii. Nirvanix also operates overseas data centers in Japan, Germany and Switzerland. Going in to bankruptcy, the company employs 30 employees. Decl. at *5.
Company Finances
As of the date of filing for bankruptcy, Nirvanix’s gross revenue totaled $4.4 million. Financial statements reflect a book value of $11.6 million and liabilities totaling $26.6 million. Decl. at *6. Nirvanix estimates its secured debt at $22 million and has an equipment lease with Dell Financial Services with an outstanding balance of $9.4 million. Decl. at *10.
Events Leading to Bankruptcy
In order to grow in the cloud storage industry, Nirvanix needs to raise additional capital to expand its infrastructure. From its beginnings, the company has funded its operations using through convertible preferred stock investments, notes and lease financing. Decl. at *12. In 2013, the company sought another round of financing in response to rising operating costs. The second round of financing was not enough to address the company’s capital needs, which in turn led management to look for opportunities to restructure or sell the business. Id.
Objectives in Bankruptcy
Nirvanix received several expressions of interest by third parties looking to buy the company. The company was unable to agree on the terms of a sale outside of bankruptcy. By filing for bankruptcy, Nirvanix hopes to continue its business long enough to complete a sale of substantially all of its assets under a section 363 of the Bankruptcy Code.