December 03, 2008, 11:43 AM — Troubled CRM (customer relationship management) vendor Entellium filed Chapter 11 bankruptcy on Tuesday, and Intuit is interested in buying the company's assets, according to documents filed in a Washington state U.S. Bankruptcy Court.
The bankruptcy filing follows the arrest of Entellium's former CEO, Paul Thomas Johnston and ex-Chief Financial Officer Parrish Jones on grounds they lied about the company's sales performance to attract about US$50 million in private investment funds.
The Seattle vendor is known for the video game-influenced design of its Rave product.
An Entellium employee first discovered the alleged fraud, leading to the former executives' arrests in early October.
"As a result, the Entellium Companies lost the support and confidence of their investors," reads one filing in the bankruptcy case. "Given these circumstances, and without investor support, the Entellium Companies quickly determined that they would not be able to operate profitably on a long-term basis. ... The Debtors determined that the best means to maximize the value of the Business is through a sale of their CRM-related intellectual property assets."
The company contacted 28 potential buyers. This led to "discussions with seven interested parties, including four offers to buy the Debtors' customer base."
Entellium eventually began negotiating with Intuit, coming to terms on an asset purchase agreement that would see Intuit pay about $7.7 million, according to court documents.
The agreement is subject to better offers from other parties, according to a court document. Intuit hopes to emerge from that process as the owner of Entellium's assets, said Intuit spokeswoman Diane Carlini.
She declined to provide any details about Intuit's plans for Entellium's software: "We'll know more when it closes and if we are the actual purchaser."