Vast Solutions Inc., a wireless data company spun off in the Arch Wireless Inc.-Paging Network Inc. merger last year, filed for Chapter 7 bankruptcy earlier this month in the U.S. Bankruptcy Court for the Northern District of Texas.
Chapter 7 bankruptcy is the most severe type of bankruptcy and calls for the liquidation of all the company’s assets.
Vast’s filing comes only a few short months after it was freed from PageNet in November, its bankrupt parent company. At the time of the spinoff, some pegged the value of the company at about $200 million. And, while Vast was still a subsidiary of PageNet, its value was estimated to be upward of $500 million and an initial public offering was considered. The high valuations and Vast’s technology and wireless offerings caused some to draw comparisons between Vast and another hot wireless data company-Aether Systems Inc.
But while Aether managed to go public at a time when capital was plentiful and wireless start-up companies were Wall Street favorites, Vast-which suffered from the financial failings of its parent PageNet-hit the market slowdown head-on.
“The problem with Vast was never its technology or its marketing,” said Michael Gill, executive vice president and director of research with Tejas Securities Group Inc. “They hit the capital markets at the worst possible time.”
As part of the PageNet-Arch merger, Arch gave Vast a $7.5 million secured loan to help the company get on its feet. The loan was the only real money Vast ever saw, and it also makes Arch the owner of all of Vast’s assets.
Arch is in the process of deciding what to do with Vast’s assets, said Bob Lougee, vice president of corporate communications and investor relations for Arch. What exactly comprises those assets is unclear, however. Lougee and Vast’s bankruptcy trustee, John Litzler, declined to discuss the assets in detail.
However, Litzler said Vast’s customers would be of top concern during the bankruptcy proceedings.
“I want the customers to be taken care of 100 percent,” he said.
Vast executives either declined to comment or could not be reached.
Vast was founded in June 1999 as the wireless information subsidiary of PageNet. Along with Aether, it was one of the first companies to offer both custom solution capabilities as well as outsourced management tools in a wireless application service provider model.
Initially, Vast was formed around three ventures-wireless information services, custom wireless solutions for business customers and wireless Internet gateway services. Some of is content hosting customers for wireless information included industry heavyweights Yahoo!, Bloomberg and CNN.
Before it filed for bankruptcy, Vast offered a variety of products and services. Its software architecture and technology, called Viaduct, was the foundation for its wireless solutions. Viaduct was a platform designed to manage wireless networks and devices and it provided the necessary standards interfaces. The platform was also a toolkit of software components for wireless application design.
Along with Viaduct, Vast also offered @ware, an e-mail extension product; Volley, a field-force automation application; and Telepath, a remote monitoring solution with global positioning system and asset tracking software.
And while many of these products and services were the impetus for comparisons between Vast and Aether, it soon became an unfair comparison. Aether has branched out into a variety of industry sections and offers a range of diverse products.
“Aether has morphed into something far more than what Vast was,” Gill said.
