Cyber startup Rezilion seeks court approval for $7.3M asset sale to GitLab to avoid bankruptcy
Cyber startup Rezilion seeks court approval for $7.3M asset sale to GitLab to avoid bankruptcy
Rezilion raised a $30 million Series A in September 2021, but has amassed debts of $4.3 million
Cybersecurity startup Rezilion recently submitted a request to the District Court in Be'er Sheva for the approval of a debt settlement. Rezilion, which develops tools for managing and enhancing cybersecurity, as well as finding solutions to optimize development procedures and operate digital apps securely, told the court that it has reached an agreement to sell its assets to GitLab for $7.3 million, a sum that will cover all its debts.
The company explained in its application to the court that “in recent years, and especially in the last year, a severe crisis has emerged and deepened in the high-tech industry. The first to be affected by it, and with the greatest intensity, are startup companies, such as the applicant."
Rezilion's parent company is Rezilion Inc, whose shareholders include angel investors and venture capital funds such as American investment company Guggenheim Partners, which led the Series A, JVP, one of the first investors in the company, and Kindred Capital.
Rezilion, which was founded in 2019 and has raised a total of $38 million, was founded by Liran Tancman (CEO) and Shlomi Boutnaru (CTO), who in 2013 co-founded CyActive, which was sold to PayPal two years later for tens of millions of dollars and functioned as an R&D center for the financial giant. Both companies made Israel’s southern city of Be’er Sheva their home.
Through attorney Pinni Yaniv from the Mitar Law Firm, the company claimed in the application that "the purpose of this application is to arrange an agreement that will prevent Rezilion from falling into insolvency and forced liquidation procedures, with all their consequences. The proposed arrangement, once approved, will enable the full payment of Rezilion's debts to its creditors, preserve the sources of employment and livelihood for some of the employees, prevent the destruction of the company's value and assets, and allow for the continued use and development of the intellectual property created by the applicant during its years of activity."
It is further claimed that "the essence of the matter is that the buyer - GitLab or its subsidiary company - will pay the company a total of $7.3 million for the purchase of certain assets of the company... This amount will enable the full payment of the company's debts to all of its known creditors." The request reveals that the company's guaranteed debts total approximately $4.3 million, the total of the company's general and deferred debts is about NIS 1.7 million (approximately $460,000), and there is a debt to the Israel Innovation Authority in the amount of $850,000, among others.
As part of the request, it is argued that "the arrangement is based on one main source, and it is the amount of consideration that the buyer, GitLab, will transfer, in accordance with the purchase agreement." Judge Yaakov Persky stated in a decision issued three days ago that "on the face of it, it seems that the proposed debt settlement only includes benefits... In my opinion, it would be appropriate to order the approval of the debt settlement without the need for further discussion, as long as there are no objections."
