March 07, 2001, 12:05 PM — Electronic payments company CyberCash Inc., http://www.cybercash.com/company/press/releases/2001/01mar02restructure.... " target=NEW>said last Friday that it was unable to raise the money it needed to merge with Network 1 Financial as previously planned.
Instead, CyberCash, based in Reston, Va., has filed for Chapter 11 bankruptcy protection and may be bought by Network 1 Financial Corp., based in McLean, Va., an Internet payment services company that enables merchants to accept credit-card transactions.
Company officials said that CyberCash will continue to support its customers, who encompass more than 27,500 Internet merchants and more than 100,000 individual software users.
Although the company laid off 38 people in February and another 37 last week out of a total 309 employees, company CFO John Karnes said that customers will see no interruption in service.
We did not touch customer support or our operations center, he said, adding that no further layoffs were planned.
Nasdaq halted trading of CyberCash stock on Friday.
According to Karnes, the company was forced to seek bankruptcy protection because it ran out of the money it needed to stay in business.
Our growth in 2000 was less than we had hoped for: It was relatively flat, he said.
Meanwhile, Network 1 has indicated that it plans to buy CyberCash at a court-supervised auction. However, these plans are not etched in stone even though the merger would be a good fit, bringing together everything a merchant needs to accept credit cards on a Web site.
Anybody will have the opportunity to come in and outbid Network 1 Financial, Karnes said.
The CyberCash bankruptcy doesnt mean that the business model of providing Internet payment services is a bad model, said George Barto, an analyst with the Gartner Group in Stamford, Conn.
Instead, he said, there are too many companies offering these services and some cant reach the critical mass they need to stay in business.
Is this a surprising event? No, he said.