Bankruptcy Court Approves Webvan Liquidation Plan

A California bankrutpcy court has cleared the way for online grocer Webvan to liquidate its remaining assets, a process that should bring closure to the high-profile dot-com failure.

Webvan did not reveal specific details, but said Friday that the plan, which will take effect on Tuesday, will enable it to pay some of its unsecured creditors.

As expected, however, holders of Webvan stock will receive no compensation under the liquidation plan.

“The company, does not expect … to have any funds available for distribution to its equity holders,” Webvan said in a statement.

Pay Day

The plan, which calls for the resignation of all of Webvan’s directors and officers, names a disbursing agent to pay out the remaining cash assets among the firm’s many creditors.

Those assets include several million dollars in cash, funds raised through a series of bankruptcy auctions across the United States.

Fire Sales

The largest of those sales raised US$2.65 million when Oakland, California-based Kaiser Foundation Hospitals purchased Webvan’s technology platform, domain name and other assets.

Kaiser, a division of health care giant Kaiser Permanente has yet to reveal how it will use the Webvan assets, though speculation has been that it would modify the technology to help it manage its network of medical facilities.

Along the way, Kaiser outbid Webvan founder Louis Borders, who had vied to take control of the software platform he helped create.

According to reports, Webvan spent as much as $100 million to develop the technology, which helped route orders and track inventories at what Webvan once envisioned would be a $1 billion network of warehouses and distribution centers.

In addition, Webvan raised undisclosed sums at several other auctions, including a two-day sale of laptops, servers, office furniture and other items at its headquarters in Foster City, California and the sale of HomeGrocer.com assets, a regional grocery and prepared food delivery service for which Webvan paid $1.2 billion in mid-2000.

Defining Dot-Bomb

Webvan’s July bankruptcy filing ended a run that saw the online grocer go from rapid expansion to failure in a matter of months.

When it folded, Webvan said 481 million shares of its stock were in the hands of stockholders, though much of it was concentrated among several large shareholders.

At the time of its bankruptcy move, Webvan was also hit with a spate of lawsuits, most calling into the question the circumstance of the grocer’s 1999 initial public offering.

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