NEW YORK • A US court has approved a plan to wind down the estate of Jumio Inc, The Wall Street Journal reported, in a win for the start-up's early backers like Facebook co-founder Eduardo Saverin who had fought allegations of rigging the firm's bankruptcy to their advantage.
Jumio, whose clients include United Airlines and Airbnb, filed for bankruptcy in March, about a year after Mr Saverin and venture-capital firm Andreessen Horowitz invested US$15.5 million (S$21.6 million) in the company.
Mr Saverin tried to buy the firm out of bankruptcy but was outbid in May when Centana Growth Partners won a court-supervised auction with an offer of US$850,000.
The former Jumio, now called JMO Wind Down Inc, is the corporate shell tasked with the debt repayment, the Journal said.
Central to the winding down plan is a settlement reached earlier this year that was backed by Mr Saverin and Andreessen, as well as a committee representing shareholders, the Journal reported.
The plan, which calls for repayment, also creates a trust that will help shareholders pursue lawsuits against some former officers and directors, including Jumio founder and former chief executive Daniel Mattes.
A spokesman for Mr Saverin said in a statement yesterday that the plan will benefit all of Jumio's stake holders and allow them "to pursue claims relating to the wrongdoing that precipitated the bankruptcy".
"Additionally, creditors will be paid and equity holders will have a path to pursue recovery."
The Journal said that the plan, when it takes effect, will largely shield Mr Saverin and Andreessen from future lawsuits tied to Jumio's bankruptcy, though some shareholders retain the right to sue Mr Saverin and others. One lawsuit is already pending.
Bloso Investments sued Mr Saverin and other directors, accusing them of mismanaging the identity-verification company and duping shareholders about its prospects. The Journal said court papers showed that as CEO, Mr Mattes made stock trades in the secondary market that drew regulatory attention. Jumio's lawyers also said his actions, along with other financial and accounting irregularities, caused new investments to disappear and triggered Jumio's downfall, according to the Journal.
Mr Mattes said he expects to appeal against the court's ruling. He has accused Mr Saverin and other former Jumio directors of mismanaging the firm and engineering its bankruptcy in ways to avoid being sued.