After three weeks in bankruptcy limbo, local Internet service
provider Hollinet was auctioned off Thursday to the highest bidder
for $53,000.
James McDonald, owner of Sacramento-based company Iamis
Information Services, Inc., outbid South Valley Internet owner Roy
Engehausen by $1,000.
After three weeks in bankruptcy limbo, local Internet service provider Hollinet was auctioned off Thursday to the highest bidder for $53,000.
James McDonald, owner of Sacramento-based company Iamis Information Services, Inc., outbid South Valley Internet owner Roy Engehausen by $1,000.
Hollinet’s customers, which totaled around 2,000 when the company filed for bankruptcy three weeks ago, will have full service and technical support back in over a week, McDonald said.
McDonald, who had been working with former Hollinet owners Darlene Colvin and Brent Olson’s attorneys since the day they filed for Chapter 7, was pleased the process had finally come to an end, he said.
“It was an interesting process to go through, and I hope I never have to go through it again because of the stress and uncertainty,” McDonald said. “I’m happy at least knowing that everything’s settled down and I can get the business going again.”
Hollister resident Anne Alcini, who has been frustrated with Hollinet’s e-mail service over the past weeks, is relieved the company will soon be running at full force again, she said.
“I’m so glad something has happened,” Alcini said. “Because it has been a mess.”
Before the auction began Engehausen had a maximum price set in his mind of $52,000, he said.
“Obviously McDonald wanted it more than we did so we didn’t bid the price up,” he said. “If we had pushed it any higher we were taking a risk of not making any money and ending up in bankruptcy court again.”
A third business owner, Bernard Picot of RapidWave, Inc., had expressed interest in bidding on the company but did not attend the auction. He was unavailable for comment.
The bidding, which lasted about 20 minutes, started at $40,000 and went up in $1,000 increments, Engehausen said.
Since the company filed for bankruptcy May 5, it had been operating under the protection of the bankruptcy court. Included in the total fee, the new owner will have to pay approximately $30,000 in operating costs in addition to the buying price, Engehausen said.
Because most of Hollinet’s tangible assets, such as equipment and office furniture, were leased and owned by creditors, the auction was only for the company’s customer base, he said.
“So it was more like $80,000… and we were only bidding on the customer list,” Engehausen said.
The next week will be spent filing the necessary paperwork, transferring the company to McDonald’s name and “kick-starting” the operations again, he said.
The final closure on the deal will be next Friday, he said.
McDonald provided technical support to Colvin and Olson for the business over the years and spoke with the former owners after the auction commenced.
“They are happy and they’re giving me all the support I need to transition things over,” he said.
McDonald has been talking with former Hollinet employees, but doesn’t know who is willing to stay with the company and who has committed to other endeavors, he said.
Hollinet’s customer base dwindled since the company’s bankruptcy debacle began, and many people switched over to South Valley Internet in the interim, Engehausen said.
“A number of people got nervous and switched providers,” he said. “A significant number of people moved from Hollinet to us because technical support was spotty and they just gave up.”
Both men said their relationship has been amicable during the entire process and discussed cooperating on several ventures once McDonald gets the business up and running again.
“The bottom line is that we each have better competencies and the door is wide open to working together with different services,” McDonald said. “There are different areas where we can help each other, and the people of Hollinet will benefit from that because there will be a lot more options for them.”
