CompuSave Corp., after a three-year struggle against mounting losses, filed Wednesday for protection from its creditors under Chapter 11 of the U.S. Bankruptcy Code.
The bankruptcy filing caps a series of misfortunes that have stricken the troubled Irvine-based maker of video shopping terminals, whose losses since its founding in 1983 total $11.6 million.
According to the court filing, CompuSave currently has $3.8 million in assets and $4 million in debts to about 605 creditors. The largest creditor is owed about $132,000.
The bulk of CompuSave's creditors consist of suppliers and other vendors, said William Starrett, a Newport Beach attorney representing CompuSave. The company, he said, "has a minimal number" of secured creditors and virtually no bank debt.
The last straw for CompuSave had been its undersubscribed rights offering, which company officials hoped would raise about $5 million in badly needed cash. The offering expired last week without even coming close, said David Young, the firm's chief financial officer.
While the bankruptcy itself was voluntary, Young said, the failed rights offering left CompuSave no recourse but to seek protection from creditors.
Young refused to say how far short the offering fell. However, Starrett said it raised "a hair under a million dollars."
The money, which was primarily raised from among CompuSave's smaller shareholders, has since been returned, he added.
"Once it became apparent that the rights offering was not a success, it was just a matter of time until the company would file for bankruptcy," said one West Coast analyst, who asked that his name not be used.
CompuSave's woes began in mid-1985 when it went into volume production of its "Touch-and-Save" device, which allowed a user to order merchandise by inserting a credit card into the machine and pressing a touch-sensitive video screen.