One of the oldest and formerly successful SMS marketing firms, Hipcricket, has filed for Chapter 11 bankruptcy protection. As part of the process, the company has agreed to sell its assets to mobile-marketing company SITO Mobile for $4.5 million in cash. According to a Hipcricket statement, the company is seeking to maintain day-to-day operations and maintain employee benefits and payroll. SITO has agreed to provide $3.4 million in financing.
CEO Todd Wilson said in a company statement: "While we have implemented various cost-cutting initiatives and explored a wide variety of strategic alternatives, the benefits of these efforts could not be fully realized and liabilities continued to mount. As such, the Board determined that a sale of assets via a court-supervised process provides Hipcricket the most viable option to protect our human capital and maximize recovery for our stakeholders. We are pleased that SITO Mobile has agreed to carry our business forward.
"We believe this partnership will provide a new foundation upon which to stand and brings together two best-in-class mobile marketing and mobile advertising solutions."
The takeover by SITO would involve honoring all employee agreements and current contracts, and keeping Wilson on for up to a year as a consultant. The sale process also allows for competing bids from companies other than SITO.
Hipcricket’s current assets are not expected to be sufficient to cover current debts. According to the company statement, stockholders will not receive a distribution from the asset sale and the stock will be extinguished.
The companies do not expect current client business to be impacted.
Hipcricket was among the pioneers in location-based and other forms of SMS mobile marketing. Over the years, it boasted of flying hundreds of thousands of campaigns. Its struggles are indicative of the transition away from SMS in the U.S. especially, and toward various messaging apps and mobile app alerts.
SITO Mobile is a location-based ad and messaging platform. It counts among its clients Walmart — where it claims to have sent over 1 billion messages— Home Depot, The Gap, Fox Searchlight Pictures and Day’s Inn. It offers geo-fenced messaging and walk-in attribution, a DSP for programmatic ad-buying.