OnLive Launches New Company to Avoid Bankruptcy

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Cloud gaming service OnLive is still live, but under new management, per a statement released Sunday night by company spokesperson Jane Anderson. The press release addressed last Friday’s rumors that the company went bankrupt and laid off its entire staff.

The statement clarifies that OnLive is restructuring under an “Assignment for the Benefit of Creditors” (ABC), which is similar to bankruptcy and allows troubled companies to swiftly sell their assets to another company.

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“All of OnLive, Inc.’s assets (e.g. technology, patents, trademarks, etc.) were transferred to an assignee, which then sold the assets to the new company,” according to an FAQ section accompanying the release.

In this case, the new company will have the same name, and its first investor is an affiliate of Lauder Partners, a venture capital firm that backed OnLive from the beginning.

Anderson also confirmed that OnLive laid off all of its employees, but offered nearly half of them jobs with the newly-structured company; the rest received offers to consult in return for options.

A former OnLive employee told games blog Kotaku on Aug. 18 that there were not enough paying subscribers to sustain OnLive. Only company assets — not stocks — were transferred to the new OnLive, so the staff’s stocks are worth nothing now, the staffer said.

The statement clarifies that CEO Steve Perlman is not getting stocks or compensation in this transaction, noting that “most execs are receiving reduced compensation to allow the company to hire as many employees as possible within the current budget.”

Perlman will remain CEO, said Gary Lauder, Lauder Partners head, speaking to the San Jose Mercury News‘s Monday.

Anderson added that OnLive expects its partnerships to continue, and says that its more than 2.5 million subscribers (and 1.5 million active users) shouldn’t notice “any change whatsoever” to the service.

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