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3 Creditors Seeking Bankruptcy for Pixelon


Three creditors of Pixelon Corp., the online broadcast network that shocked the "dot-com" world last month when its founder admitted to being a convicted embezzler, are trying to force the San Juan Capistrano company into bankruptcy.

The trio of Orange County companies, which are owed a combined $552,500, filed a Chapter 7 liquidation petition on behalf of Pixelon in federal bankruptcy court in Santa Ana. The maneuver means that Pixelon has 20 days to fight the petition, repay the creditors or convert the petition into a Chapter 11 reorganization, which would allow the company to stay in business under Bankruptcy Court supervision.

"I've contacted Pixelon and the response has been either, 'We're reviewing the claim,' or, 'Stand in line, you're not alone,' " said Michael W. Kinney, an attorney for the creditors.

Officials at Pixelon, which makes software that provides access to audio and video over the Web, could not be reached for comment Tuesday. Pixelon 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.

Pixelon burst onto the Internet scene last fall. Celebrating its launch, company founder Michael Adam Fenne used $10 million of the $23 million he had raised from investors to throw a lavish party in Las Vegas that was hosted by comedian David Spade and featured 10 noted performers.

Last month, authorities in Virginia announced that Fenne's real name was David Kim Stanley, a convicted felon who had bilked people out of hundreds of thousands of dollars and then failed to appear in court. He had been on Virginia's most-wanted list for three years. Stanley surrendered to Virginia state police in April.

The bankruptcy petition is only one of Pixelon's legal battles.

In November, the company's board of directors, outraged by the excess in Las Vegas, ousted Stanley and several other employees. Among them was Simone Sheffield, a company employee whom Pixelon had hired to organize the party.

Sheffield, via a collection agency, subsequently filed a lawsuit in March against Pixelon in U.S. Superior Court in Orange County.

According to the complaint, friends told Sheffield in 1999 about an Internet company that had "millions of dollars to spend, but had no idea how to spend them properly." Stanley later hired Sheffield to organize the iBash, as it was dubbed, along with other duties. Sheffield's attorneys declined to comment.

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