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Beyond.com (Nasdaq: BYND),
which provides e-commerce software to online
merchants and the U.S. government, has filed for Chapter 11
bankruptcy and agreed to sell its assets and client
contracts to e-commerce outsourcing 
company Digital River
(Nasdaq: DRIV).
Digital River CEO Joel Ronning told the E-Commerce Times that synergies between Beyond.com and Digital River make the acquisition a logical step. "It's really a company that is very consistent with our current business, so it's a low-risk transaction for us, but with high rewards," Ronning said.
Digital River agreed to buy Beyond.com's assets for US$3.5 million in cash and $7.5 million in Digital River stock, which was up 4 percent to $21.17 in midday trading Friday. Shares of Beyond.com fell 3.7 percent to 79 cents on the news before Nasdaq halted trading in the stock. The acquisition is subject to bankruptcy court approval.
Ronning said bankruptcy proceedings could take up to 60 days, after which Digital River will move Beyond.com's clients to the Digital River platform. That transition will take another 60 days.
Money Troubles
According to Ron Smith, president and CEO of Beyond.com, the company could not find the necessary capital to solidify its balance sheet and pay its debts.
The bankruptcy filing "will help to ensure that our customers continue to receive uninterrupted service through the sale process," Smith said.
From B2C to B2B
Beyond.com, founded in 1994 as Software.net, manages and markets eStores for such clients as McAfee, ACT! and Sybex.
The company originally opened an online retail store
for computer products, but in January 2000 it shifted its
focus to providing support 
for other Web merchants.
In August, Beyond.com launched an Internet mall to showcase its clients' eStores. The company received commissions for purchases made through the mall.
Revenue Up
The new business plan seemed to be working. In the third quarter, Beyond.com reported a 50 percent rise in revenue from its eStores business and a 44 percent increase in government sales.
When reporting the company's third-quarter results on October 25th, Smith acknowledged that Beyond.com was considering a sale.
Ronning said it was a failure of execution and leadership, not technology, that led to Beyond.com's problems.
"This industry is not very forgiving, and the market does not respond well to second- or third-place players," he said.
In addition, according to Ronning, Beyond.com experienced a lot of turnover among its top executives, which made execution difficult.
Digital River provides e-commerce technology, including
site development and hosting, transaction processing,
fraud screening, authorization and settlement.
The company said it has more than 13,000 clients, including Novell (Nasdaq: NOVL), Symantec (Nasdaq: SYMC),
Staples.com and Nabisco.
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