Moving concierge startup Kandela declares bankruptcy
Three years after acquisition by Porch, company has no assets or operations
Moving concierge startup Kandela has filed for bankruptcy after losing a legal dispute against Porch Group, the firm that bought it in 2019, The Real Deal has learned.
Beverly Hills-based Kandela, which arranged the installation of services such as Internet and cable television for people moving into new homes, attributed its insolvency to a $1.4 million award that Porch won in arbitration.
Porch acquired Kandela in an $11.5 million all-stock deal in 2019. More than 100 of Kandela’s employees were absorbed by Porch after the acquisition.
Kandela sued in 2020, alleging that its new parent company engaged in a “stunning and systematic pattern of fraud,” according to court documents. The dispute centered on $6 million in “earnouts” that Kandela was entitled to for hitting profit and revenue goals. At the time, Kandela said that Porch was “hell-bent” on ensuring that it would not get the earnouts.
“Kandela discovered several material misrepresentations by Porch that revealed the impossibility of achieving the milestones contemplated by the earnouts,” Kandela’s new bankruptcy filing reads.
In response to the lawsuit, Matt Ehrlichman, CEO of Porch, said that Kandela “oversold” its ability to hit the targets, previous reports show.
Porch won in arbitration in May of last year. Kandela then appealed the case and lost. In September, Porch filed a case to enforce the arbitration award.
In its bankruptcy petition, which was filed on Monday, Kandela described itself as “a shell company with no assets or business operations,” and thus no ability to pay the arbitration award. The firm said that it tried to settle the matter for “an amount it believed it could collect in satisfaction” but was refused repeatedly.
“The instant filing is a result of Porch and its vindictive efforts to harass Kandela to enforce an otherwise uncollectable judgment. Kandela has no assets, no employees and no business operations. Accordingly, Kandela has filed this case to finally close this chapter of its life in the best interest of its estate and its creditors,” the petition read.
Kandela declared the value of its assets at $6,529. Its liabilities, meanwhile, were at nearly $1.8 million, spread between nine creditors.