Veoh, an online video sharing service plans to file for Chapter 7 bankruptcy and liquidate its business, according to the company's founder, Dmitry Shapiro. Shapiro posted a passionate open letter blaming a legal battle with Universal Music Group for the company's bankruptcy:
"Two years ago, Universal Music Group (UMG), the largest music company in the world sued Veoh alleging copyright infringement. While we made every effort to convince them that we were not their enemy and had not infringed on their content, they pursued a relentless war of attrition against us in federal court," Shapiro wrote. "We eventually prevailed in a decisive summary judgment that has set an important precedent for the entire industry. Unfortunately, great vision, a passionate team, tens of millions of users, millions in revenues and victory in court were not enough. The distraction of the legal battles, and the challenges of the broader macro-economic climate, have led to our Chapter 7 bankruptcy."
Veoh has already laid off its entire staff in light of the bankruptcy filing. The lawsuit to which Shapiro referred was where Universal accused Veoh of purposely violating the company's copyrights by encouraging it's users to create videos using copyrighted music. Veoh had already faced issues surrounded its inability to monetize its business and the lawsuit scared off more potential investors. A Chapter 11 bankruptcy was unlikely because Veoh had already burned through millions in capital and was unable to make a profit. In Chapter 7 bankruptcy it assets will be liquidated and the proceeds will be distributed to its creditors.