A brief history of bankruptcy among tech pioneers
Anthony Levandowski has joined an exclusive group of tech executives who've sought bankruptcy protection.
Technology has created many, many personal fortunes. It has also landed a small group of entrepreneurs and technologists deep in personal debt.
Anthony Levandowski, Uber's former head of self-driving technology, filed for bankruptcy protection on Wednesday after a court ordered him to pay $179 million to Google. Levandowski, who was previously an engineer at Google's Waymo, had been accused of breaching his contract, stealing more than 14,000 documents, and unfairly poaching colleagues when he started Otto, which was ultimately acquired by Uber. Levandowski also faces criminal charges.
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An Uber filing with the U.S. Securities and Exchange Commission this week states that Levandowski's contract indemnifies him, but says "whether Uber is ultimately responsible for such indemnification is subject to a dispute between the company and Levandowski." That's likely why Levandowski filed for Chapter 11 bankruptcy, which will allow him to negotiate his debts. Levandowski's bankruptcy petition reports between $50 million and $100 million in assets, but between $100 million and $500 million in liabilities.
In filing for bankruptcy, Levandowski joins an exclusive group of tech executives who have given their accountants sleepless nights. Though most startup failures don't end in personal bankruptcy — liability typically tends to remain with a company, rather than an individual — there are some notable examples of entrepreneurs seeing it all go wrong. Here are some of the biggest.
Jia Yueting, founder of LeEco and Faraday Future
Chinese entrepreneur Jia Yueting found success with LeEco, the Chinese tech group that makes everything from phones to streaming services. But when LeEco failed to pay its debts in 2017, a Shanghai court froze Jia's accounts. Shortly thereafter, Jia left for the U.S. to work on Faraday Future, his electric car company.
Faraday never got further than a concept car and struggled financially. Jia spent $900 million of his own money on the company and raised $2 billion from Evergrande. But after the money ran out, Jia stepped down as CEO. He was on the hook for $3.6 billion in debt and filed for bankruptcy.
His troubles didn't end there. In October 2019, the U.S. Department of Justice accused him of "engaging in dishonest behavior" during Faraday's bankruptcy proceedings, and last month the company's former general counsel sued him. Last week, though, Jia reportedly filed an agreement with his creditors, which may finally bring the bankruptcy procedure to an end.
Carl Lundström, The Pirate Bay backer
Swedish businessman Carl Lundström was born rich, the heir to the Wasabröd crisp bread fortune. After the company was sold to Sandoz, Lundström founded Rix Telecom, which provided services and equipment to The Pirate Bay, a Swedish peer-to-peer content-sharing site. In 2009, Lundström was convicted of copyright violations for funding the site and was sentenced to four months in prison, which he ended up serving under house arrest. Lundström and his three partners were collectively fined 46 million kronor, or around $7 million. Lundström paid just 233,000 kronor of those damages, and he likely will never pay the remainder; in 2012 he filed for personal bankruptcy.
Paul Moller, founder of Moller International
Engineer Paul Moller spent decades working on flying cars, most notably the Moller Skycar M400. A former professor at UC Davis, Moller claimed to have spent over $100 million producing the car and was once sued for fraud by the SEC (he settled for $50,000). Ultimately, his dreams never amounted to much, and in 2009 Moller declared bankruptcy. In 2017, the M400 was put up for auction on eBay, though it appears no one bought it. To add injury to insult, in 2019 two Skycar prototypes were destroyed in a fire.
Amir Golestan, founder of Micfo
Infrastructure-as-as-service company Micfo was thrust into the spotlight last year when the federal government brought wire-fraud charges against the company and its founder, Amir Golestan. The Justice Department's case, which is ongoing, alleges that Golestan created shell companies to trick the American Registry for Internet Numbers into assigning him 800,000 IP addresses. Golestan then sold those addresses, which are increasingly scarce, for up to $14 million, according to prosecutors.
When the charges were announced, Micfo's revenue dried up, and with personal debts also mounting, Golestan filed for bankruptcy in October 2019. In his filing Golestan stated he owed between $10 million and $50 million to more than 50 debtors including JP Morgan, South State Bank and the IRS.