Sizmek, Inc. – Leading Ad Management Company Files Chapter 11 as Lender Seizes Accounts and Targets Cash Receivables

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March 29, 2019− Sizmek, Inc.  and 7 affiliated Debtors (“Sizmek” or the “Company”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the Southern District of New York, lead case number 19-10971. The Company, an independent buy-side advertising platform, is represented by Stephen E. Hessler of Kirkland & Ellis. Further board-authorized engagements include FTI Consulting as financial advisor. 

The Company’s petition notes between 1,000 and 5,000 creditors; estimated assets between $100mn and $500mn; and estimated liabilities between $100mn and $500mn. Documents filed with the Court list the Company's three largest unsecured creditors as (i) Index Exchange, Inc. ($8.9mn Trade payable), (ii) PubMatic, Inc. ($7.3mn Trade payable) and (iii) OpenX Technologies Inc. ($5.9mn Trade payable).

In a press release announcing the filing, Sizmek advised that it had filed for Chapter 11 protection to “preserve value and seek access to capital while the Company continues to review strategic alternatives.” The press release continued, “In the months preceding the filing, Sizmek has been in extended discussions with its stakeholders regarding their continued support of the Company as it pursued various strategic alternatives to address its over-leveraged balance sheet. Despite these ongoing discussions, the Company's primary lender [reportedly Cerberus Capital Management] took control of the Company's bank accounts and sought to divert customer receivables, thereby cutting off access to capital.

As a result of this action, Sizmek's Board of Directors unanimously determined that Chapter 11 protection is the only responsible mechanism by which the Company can seek access to capital and preserve value while it continues to explore value-maximizing alternatives. The Company is aggressively seeking to access its existing cash, and intends to fully resume normal-course operations as soon as possible.”

About Sizmek

According to the Company, “Sizmek is the world's largest independent buy-side advertising platform…. Sizmek operates its platform in more than 70 countries, with local offices in many countries providing award-winning service throughout the Americas, EMEA, and APAC, and connecting more than 20,000 advertisers and 3,600 agencies to audiences around the world.”

Sizmek was acquired by private-equity firm Vector Capital for $122 million in 2016. In an SEC filing at the time (Sizmek was ultimately delisted following the purchase by Vector and ceased its SEC reporting), Sizmek noted, “The purchase price was funded by equity financing from Vector Capital, debt financing from Wells Fargo Bank and certain other lenders and a portion of the Company’s cash on hand.”

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