Velo Holdings Inc, the parent company of Neverblue, Lava Life and Vertrue has filed for Bankruptcy this morning, as reported by Reuters.
According to reports this is specifically because of enormous losses sustained from re-billing and continuity practices.
According to Dow Jones:
Velo blamed, in part, tighter regulatory control of one of its online marketing practices for its strained finances. The method redirects customers who have completed a purchase on its discount retail website to another website, a Velo subsidiary that sells fraud and identity theft protection services, and asks the customer to enroll.
Velo defaulted on both its credit facilities in December to avoid a liquidity crisis, it said, prompting Moody’s Investors Services to downgrade the company’s debt ratings. As a result, Chase Paymentech LLC, Velo’s credit-card processor, notified Velo it would terminate their agreement on April 20.
According to its bankruptcy filing it has over $1 Billion in Debts, but will try to restructure its business and continue operations under Chapter 11.
We will continue to report this story as more information is available.
UPDATE: Neverblue has informed Performance Marketing Insider the following:
This filing will not impact Neverblue’s ability to meet client needs in any way – we intend to continue to operate business as usual without interruption. Neverblue’s business is fundamentally strong and we intend to make all affiliate payments on schedule, in a timely and reliable manner. We’ve built out our global, performance-based online marketing strategy across several unique verticals, and now operate one of the largest international cost per action networks. Neverblue is absolutely well-positioned for future growth as one of the most highly-valued lead generation companies.