One week after cutting 40 percent of its workforce, Homes.com filed for bankruptcy protection Friday.
The bankruptcy filing came almost a year to the day after Homes.com garnered US$38.5 million in funding from some of the best-known venture capitalists in Silicon Valley.
An attorney for the Menlo Park, California firm told the VentureWire newsletter that the filing stems from a legal dispute over a lease at a Florida facility that houses Homes.com’s Internet servers.
Cash Crunch On
However, Homes.com, which has sought to be both a technology provider to real estate agents and an online destination for buyers and sellers of homes, has acknowledged its own cash crunch.
Earlier this month, it axed 150 workers across a range of departments, citing “disappointing operating results in January and February, combined with the very difficult environment for raising capital.”
President and chief operating officer Tom Orsi said at the time the cuts were made so that Homes.com could “continue as a viable business” and would not slow services to its customer base of 150,000 brokers and agents.
Homes.com hired Orsi, a former executive with PricewaterhouseCoopers, in January. Orsi had spent nearly 40 years at PricewaterhouseCoopers.
Still in Business
A year ago, Homes.com closed a $38.5 million funding round, gaining backing from Hummer Winblad Venture Partners, Kinetics Ventures and Lighthouse Capital, among others.
Homes.com is expected to remain “fully operational” during the bankruptcy and should emerge after “some financial restructuring,” according to its attorney, David Caplan, who said that Homes.com chose bankruptcy over a protracted legal battle with its landlord.
Homes.com recently unveiled a wireless component to its Web site, which has garnered industry awards for usability.
While the Chapter 11 bankruptcy filing may only result in a reorganized Homes.com emerging, the site may have bigger problems, including a formidable, growing competitor.
Homes.com was an early and vocal critic of Homestore.com (Nasdaq: HOMS) as it moved to consolidate the Multiple Listing Service (MLS) into its Realtor.com site, a move that gave Homestore access to more than 90 percent of all property listings.
However, to date Homestore has emerged unscathed from antitrust investigations launched by the U.S. Department of Justice.
Already profitable, Homestore strengthened its position in the online real estate world earlier this year by acquiring Move.com for about $900 million in stock.