July 13, 2001 6:05 PM PDT

Webvan files for bankruptcy protection

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Troubled online grocer Webvan filed for Chapter 11 bankruptcy protection Friday, four days after shutting down operations and laying off 2,000 employees.

According to papers filed in U.S. Bankruptcy Court in Delaware, where the California-based company is incorporated, Webvan listed assets of $1.2 billion and debts of $106 million, Reuters reported. The assets include $734 million in goodwill and other intangibles, the wire service cited court papers as saying.

The company issued a terse press release Friday stating that it "plans an orderly sale of its business and assets."

Webvan, once worth $1.2 billion, announced on Monday that it was shutting down. It served customers in seven markets: Chicago, Los Angeles, San Francisco, San Diego, Seattle, Portland, Ore., and Orange County, Calif. Because of ongoing financial struggles, the company had already shut down in three other markets since late last year.

"This is the end of the road for the 'grow-big-fast' strategy, and what's left is waiting to see the fate of Amazon," said Vernon Keenan, an analyst with San Francisco-based Keenan Vision. "Because after all, they were the creator of the grow-big-fast management philosophy."

As recently as last month Webvan had filed documents with the Securities and Exchange Commission saying it expected to have enough money to operate through the first quarter of 2002. Despite a recent austerity program that slowed its cash-burn rate, executives decided to file for bankruptcy.

The company's stock has plummeted since reaching a high of more than $30 during its November 1999 IPO. The shares closed Friday at 6 cents. The company recently won shareholder approval for a 25-to-1 reverse stock split and was fighting to keep its shares listed on the Nasdaq Stock Market.

Webvan spokesman Bud Grebey earlier blamed problems such as an unexpected drop-off in orders when the company changed its delivery fees and bad press over former CEO George Shaheen stepping down, as well as a critical auditor's report and layoffs and shutdowns.

Webvan, which attracted more funding than any e-tailing company other than Amazon.com, raised $375 million in its initial public offering and had such high-profile backers as Benchmark Capital, Softbank, Sequoia Capital and, through its HomeGrocer acquisition, former Netscape Communications CEO Jim Barksdale of The Barksdale Group.

It had an ambitious 26-city expansion plan and had signed a $1 billion Bechtel contract to build a string of high-tech warehouses worth about $30 million each.

Reuters contributed to this report.

 

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