Danish firm Boomtown ApS has announced it has filed for bankruptcy following financial difficulties that it said have arisen due to an inadequate settlement from the company's former owner.
The current owner of the online gaming community and internet cafe chain AA Technologies acquired the business from TDC in 2008, however AA Technologies claimed yesterday that it had been given incorrect information at the time of the sale about the business's finances.
"It is the Company's perception that TDC had misled the Company with incorrect information regarding housing costs in the transfer of the Company from TDC to AA Technologies (Holding Company of Boomtown ApS) in 2008," it said in a statement.
"After prolonged negotiation with TDC, the final settlement from TDC to compensate the Company came short from what could make the Company survive, as stated in the settlement proposal sent to TDC.
"Additionally, during negotiations between the Company and TDC, TDC terminated all three leaseholds held by the Company, opening grounds for higher lease terms for the Company, which would have created more financial stress on the business."
The resulting situation was that Boomtown was left with "no hope" for profitability in the coming years, according to AA Technologies.
Bankruptcy has been filed for with the Danish Maritime and Commercial Court, although the company said that it would continue discussions with various parties regarding alternatives, which could include a potential sale of the business.
Ashraf Iskander, Boomtowns CEO said that it would continue to manage its properties and operate the business in the short term. "It's unfortunate that a series of events resulted in the Company submitting a petition for bankruptcy in accordance with the Danish Bankruptcy Act. The Company will continue to explore strategic alternatives with the assistance of its financial advisors," he confirmed.
The Boomtown.net website - an English, Danish and Swedish site that forms part of the company's assets - said today that due to legal issues surrounding the bankruptcy notice it would cease updates for a few weeks.
However UK editor Harry Neary confirmed that there were plans to relaunch with a new site imminently. "The plans are to continue and launch with our shiny new website that has been in development for several months now," he said today.