WOODLAND HILLS, Calif.—The auction of beleaguered Sex.com has been postponed a day before it was to take place due to legal action taken by the domain's creditors, three of whom filed an involuntary Chapter 11 petition Wednesday against Sex.com owner Escom LLC.
The petition was filed shortly after noon in the Woodland Hills division of U.S. Bankruptcy Court for the Central District of California on behalf of three investors—Washington Technology Associates (owed $6,607,803.66), iEntertainment, Inc. (owed $3,476,515.02) and AccountingMatters.com LLC (owed $7,800.00).
The total amount of the claim is $10,092,118.68.
A press release sent out Wednesday on behalf of the creditors by Lawrence Morrison, a partner with Meister Seelig & Fein LLP, spells out the reason for the late filing of an extremely rare bankruptcy petition. The auction would simply not fetch anything close to what was required.
"Petitioners took this action to protect their interests and to maximize value for all other creditors and equity holders," the announcement reads. "The filing will stay the public auction foreclosure proceedings previously scheduled for March 18, 2010, which petitioners believe would have diminished the value of Escom's assets."
In a February interview with the site, Mann said, about his experience with Sex.com, "I am merely an investor who got completely railroaded by other investors with big guns, bad practices, and bad attitudes. I am always up for a good fight since any money I would make was already pre-designated to innovative charities. I represent those charitable recipients always, I socked away enough for myself a long time ago, and I was never concerned about material wealth anyhow, the charitable works came first. I like to be clear about what I’m doing here.”
Of the auction, which was still a month away, he said, "This is clearly the best domain in the world that is for sale, the type in traffic is worth like 20M for the life of the asset at least, then add branding, uniqueness, shortness, global ubiquity, and someone building a real viral asset and brand development on top of all that, if I had access to 25M I’d easily be a buyer, someone will build it and exit for 50-100M, I'm sure.”
The February article also mentions Andrew Miller, co-founder of Internet Real Estate Group (IREG), as an Escom investor, even though at the time the story was written Miller denied that his company was involved with Sex.com.