Dot-coms often lose value more quickly than their Old Economy counterparts when the cash runs out and creditors close in, experts who work with distressed companies say. Many start-ups also seem more concerned about ramping up than keeping records, which adds a chaotic element if they liquidate.
Distressed companies can exit the scene in several ways.
Another company, often a rival, can purchase all or part of a struggling dot-com. A sinking company can put its affairs in order and close its doors. Or a dot-com can file for bankruptcy, usually with a Chapter 7 liquidation. In one example of a speedy dot-com flameout, Freei Networks Inc., a provider of free Internet service based in Federal Way, withdrew its initial public offering on Oct. 3. Three days later, the company laid off 30 percent of its 300 workers and filed for Chapter 11 bankruptcy reorganization.