Here’s yet another sad turn in the story of one of social networking’s also-rans.
Bebo, the early U.K.-based social network that AOL bought for $850 million only to turn around and sell for less than $10 million later, may see its current CEO Adam Levin go.
The company’s shareholders, who include the original co-founder Michael Birch, filed a motion today in California superior court to have a receiver appointed for the company. That court-appointed receiver would take over the company’s assets and day-to-day operations. It may take at least another two weeks for the court to come to a decision as it extended the hearing today, said Eric Benisek, the attorney representing the plaintiffs.
He said that Levin and Criterion hadn’t opposed the appointment of a receiver.
“Unless we did something funny with the papers, the expectation is that the court will grant the motion,” Benisek said.
Levin did not immediately reply to a request for comment.
This is the latest development in a nearly year-old lawsuit that pit minority shareholders like Birch, Richie Hecker, SV Angel against Criterion Capital Partners, the Los Angeles-based private equity firm that bought the site from AOL in 2010.
In a suit they filed early last year asking for $5 million in damages, they claimed that as CEO, Levin let Bebo default on its lease, resulting in an eviction from its San Francisco offices.
Levin then allegedly moved the company down to Los Angeles, without consulting the board. The suit also claimed that Levin paid himself $14,000 a month (or about $168,000 a year) as CEO even though he wasn’t working full-time at the company and was focused on other work for Criterion.
It also said that the company didn’t hold any board meetings for at least 20 months and didn’t turn over financial information about the performance of the company over to the board.
Since that suit was filed, the company also allegedly didn’t pay its review fees to operate as a registered company in Australia.
The new motion and its letters of support from other plaintiffs also say that Levin let leads for the sale of the company to potential buyers like Tagged and AdKnowledge die. Hecker, who owns less than 10 percent of the company, said in a letter of support for today’s filing that Adknowledge had talked about a potential sale for $15 million plus a $15 million earnout, but Levin never provided financials to AdKnowledge, letting the talks die.
The plaintiffs say that if a receiver isn’t put in charge of the company, it is in “severe danger of destruction.”
It would be a sad end to one of social networking’s early forerunners. At the time of its sale to AOL back in 2008, Bebo was the second largest social network in the U.K. after Facebook. It claimed that it had 40 million users who spent an average of 40 minutes a day on the site at that time.
Motion to appoint a receiver for Bebo by Kim-Mai Cutler
Request for Judicial Notice in Bebo shareholder lawsuit by Kim-Mai Cutler
Plaintiffs Memorandum in support of motion for receivership by Kim-Mai Cutler
Declaration of support for motion from Richie Hecker by Kim-Mai Cutler
Original Bebo shareholder suit by Kim-Mai Cutler