Zediva completes liquidation, customers get nothing

Unsuccessful DVD streaming service Zediva told its former customers by email this weekend that it has completed its liquidation process after a court ruling forced it to shut down last fall. The email read, in part:

“The process of liquidating the company’s few remaining assets has now been completed. The cash proceeds, net of administration expenses, have been divided equally among all of the company’s creditors (each of which was unsecured), resulting in a recovery of approximately $0.018 per dollar owed to each creditor.”

The email went on to state that any remaining service charges owed to customers won’t be paid out because processing the payment would cost more than the money left over. The law firm in charge of the liquidation process vowed to instead donate any money owed to Zediva’s subscribers to charity.
Zediva launched about a year ago with a unique proposition: The company offered to stream current-release DVD titles for $1.99 per movie – much less than customers would have to pay to VOD services like Amazon (s AMZN) or iTunes. (s AAPL) Zediva was able to achieve these low rates through a complex workaround: Instead of licensing the movies from Hollywood studios, it simply bought them on DVD, and then “rented” those DVDs to customers, who got to see a stream of the DVD as it played in one of Zediva’s many DVD players.
Hollywood took the company to court, and Zediva lost. The company agreed to pay the studios $1.8 million in damages and suspended its operations in August of 2011. Its website, which at the time stated that it hoped “to be back online soon,” has since been taken offline.