Streaming TV site Aereo files for bankruptcy, will reorganize

Aereo filed for voluntary bankruptcy on Thursday, a move the company says will allow it to “maximize the value of its business and assets” without being dragged down by ongoing lawsuits in several states.

The Chapter 11 filing appears to be a strategic decision by [company]Aereo[/company], which offered consumers a way to watch and record TV on mobile devices but has been hamstrung since suffering a 6-3 defeat at the Supreme Court in June.

Aereo’s bankruptcy petition shows it owes roughly $2 million to a list of creditors that include internet companies like [company]Level 3[/company] and [company]Google[/company], as well as several law firms. But the most significant creditors on the list are names like [company]ABC[/company] and Fox, the TV networks that are continuing to sue Aereo over copyright infringement.

Aereo’s filing simply states “unknown” in the amount owed to the “litigation party” TV stations, which also include PBS, Telemundo and NBC.

If Aereo’s bankruptcy strategy, which is described in a blog post by CEO Chet Kanojia, is successful, the company could reinvent itself as a cloud DVR service or obtain a future license to retransmit live TV.

Even though the Supreme Court ruled that Aereo cannot sell a service that lets consumers reproduce TV signals in real time without a license, the court declined to rule on Aereo’s DVR functions — that issue is currently before a federal judge in New York.

According to people familiar with the matter, broadcasters are determined to seek copyright damages in courts around the country and to effectively shut down Aereo and its technology forever. This has made it difficult for Aereo to seek new investment or an acquisition by a larger company.

While the Chapter 11 filing will serve to halt the existing copyright litigation, Aereo will need to have its post-bankruptcy plan approved by the majority of creditors and a bankruptcy judge — a task that will be made more difficult since the big broadcasters are named on the list of creditors.

The filing comes after Aereo announced large layoffs and the closing of its Boston office two weeks ago. Here’s the petition — scroll to the end to see the creditors and what Aereo owes.

Aereo Chapter 11 Filing

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