Moving concierge startup Kandela has filed for bankruptcy after losing a legal battle porch groupthe company that bought it in 2019, The only true have learned.
Beverly Hills-based Kandela, which arranged for the installation of services like internet and cable television for people moving into new homes, attributed its bankruptcy to a $1.4 million prize that Porch won in an arbitration had.
Porch acquired Kandela in 2019 in an all-stock deal valued at $11.5 million. More than 100 Kandela employees were retained after the Porch acquisition.
Kandela sued in 2020, claiming that its new parent company was involved in a “stunning and systematic fraud scheme,” according to court documents. The dispute revolved around $6 million in earnouts that Kandela was entitled to for meeting profit and revenue targets. At the time, Kandela said Porch was “intent” on making sure it didn’t get the earnouts.
“Kandela discovered several material misrepresentations by Porch that demonstrated the impossibility of meeting the milestones envisaged by the Earnouts,” Kandela’s new bankruptcy filing reads.
In response to the lawsuit, Porch CEO Matt Ehrlichman said that Kandela “oversold” its ability to meet the targets, previous reports show.
Porch won in arbitration last May. Kandela then appealed and lost. In September, Porch filed a case to enforce the award.
In its bankruptcy application filed on Monday, Kandela described itself as a “letterbox company without assets and business operations” and thus without the solvency of the arbitral award. The firm said it tried to settle the matter for “an amount it felt it could collect for satisfaction” but was repeatedly turned down.
“The immediate filing is the result of Porch and his vengeful efforts to harass Kandela to enforce an otherwise irrecoverable judgment. Kandela has no assets, no employees and no business operations. Accordingly, Kandela has filed this case to finally close this chapter of his life in the best interests of his estate and creditors,” the petition reads.
Kandela put the value of his fortune at $6,529. His liabilities, meanwhile, totaled nearly $1.8 million, spread across nine creditors.
