Sex.com Pushed Into Involuntary Bankruptcy
They say booze, sex and cigarettes always do well in a recession. Well, not the Great Recession as we can see with Sex.com being pushed into involuntary bankruptcy.
The web is often thought of as having been around forever because it has so radically changed our lives. Still, it was only 15 years ago that the web was brand spanking new. You could buy simple domain names that would ultimately become worth millions and millions of dollars.
Sex.com was one of these domains. It was registered in 1994 by Gary Kremen. You might have heard of him. He was also the founder of the site Match.com. Regardless, he was a man ahead of his time in registering the domains and has benefited in a huge way from the virtual real estate.
The story of Sex.com is a fascinating one. It is long and twisted, but the story is one of theft. An attorney allegedly stole the domain from Kremen when he convinced the domain register that a transfer had occurred. Kremen, as you might imagine, was a bit miffed. He sued everyone. The domain was eventually returned to him along with a boatload of money. The attorney was found in Mexico and prosecuted. It is a fascinating story of domain hijinks and one you can find in greater detail on the web.
In 2006, Kremen decided to legitimately sell the sex.com domain. Escom, LLC purchased it. The price? Reportedly it was a cool $14 million dollars. Considering that Kremen probably registered the domain for $20 or so, that is one heck of a return on investment! Alas, things didn’t work out so well for Escom. The company is private, so we are not privy to its finances, but what is clear is the company defaulted on its debts. This led to the foreclosure and auction of the domain. Realizing they were not going to see the money they were owed, three other creditors pushed the company into involuntary bankruptcy.
So, what happens now? Well, the extra creditors have bought themselves more time and more leverage. They can now use a bankruptcy judge to generate more interest in the domain and generate, potentially, a higher sales price. Escom has 20 days to answer the petition, so things should start developing quickly.
Ultimately, the fact Sex.com was nearly auctioned off is a sign of the times. This is not a normal recession, it is a killer. Perhaps that is why they call it the Great Recession.