Opinion ID: 791875
Heading Depth: 2
Heading Rank: 1

Heading: The Sale

Text: 3 Smart World began providing free internet service in 1996. As of June 2000, it had approximately 1.7 million registered subscribers, 750,000 of whom actively used its internet services. Smart World, however, was unable to run its business profitably and sought a purchaser for its most valuable asset, its list of subscribers. On June 29, 2000, it entered into an agreement with Juno, a competing internet service provider who was the sole bidder. Under the agreement, terms of which were set forth in a Term Sheet, Smart World agreed to sell its subscriber list to Juno and to continue referring subscribers to Juno through its distribution network. As part of the transaction, Juno required Smart World to file for bankruptcy and to conduct the sale under § 363 of the Bankruptcy Code. 3 At Juno's request, Smart World filed for bankruptcy on the very day that the Term Sheet was signed. 4 Under the Term Sheet, Juno was not required to pay Smart World for subscribers unless the subscribers were deemed qualified. 4 Compensation for qualified subscribers was to be paid partly in cash and partly in Juno stock, with the percentage to be paid in stock increasing with the number of qualified subscribers referred. 5 5 The bankruptcy court approved the sale on July 19, 2000. 6