New York-based KIT digital, a leading supplier of customisable software platforms for digital, multi-screen viewing, could seek Chapter 11 bankruptcy protection on 24 April, according to the company's regulatory filing.

KIT says it has reached an agreement with three of its largest shareholders, Prescott Group Capital Management, JEC Capital Partners, and Ratio Capital Partners, to sponsor a reorganisation of the company under Chapter 11.

Only the non-operating parent holding company, KIT digital, Inc., will go into Chapter 11. The company's already profitable operating subsidiaries, including UK-based Megahertz (bought for $2.7m in 2010), cloud-based video provider ioko365 (bought for $79.4m in April 2011), Polymedia, Kewego, and Multicast, will not be impacted. They will be regrouped into a newly-formed entity called Piksel.

KIT's modus operandi has been far from smooth sailing. It delisted its common stock from the NASDAQ at the opening of business on 21 December 2012 which triggered a class action by some shareholders. Admitting accounting errors and irregularities, KIT says it would restate annual and quarterly financials dating back to December 2009, including two quarterly reports in 2012.

KIT has purchased more than 20 companies to grow in the last 30 months. However, in the last eight months it divested 17 of them, the Wall Street Journal reports. About half of the company staff was laid off over the last several months - 300 in September 2012 - leaving it at 800 employees from about 1,400 in June 2012, they added. It included the 70+ staff laid off when the company's Australian arm went into administration in early January.

KIT founder Kaleil Isaza Tuzman stepped down as chairman of the company in April 2012. Then, over the last several months the board has been replaced and a new slate of executives have been named.

KIT consolidated its foothold in the packaged media sector as well. In addition to the five above-mentioned subsidiaries, in September 2010 KIT acquired Czech authoring and post-production facility Brickbox Digital Media for $10.1 million as well as International Digital Management, in which Brickbox had previously purchased a significant stake. In October last year, it was the turn of another Czech company to come under KIT's wings - Digital Media Production (DMP), a leading DVD/Blu-ray production and post facility in Central Europe.

After the restructuring plan, KIT-turned-Piksel expects to be in a position to pay all vendors, suppliers and other holders of valid pre-petition claims.

KIT digital Content Solutions, a company that was spun off with little fanfare in June 2012 as a wholly independent business from KIT digital rebranded as utd. by content in January of this year, starting operations with a much-needed clean slate.

As we go to press we learn that Brickbox and DMP have been merged with KIT digital Content Solutions-turned-utd. by content as dissolved in the process. The company once again changed name into utd. by content CEE.

This marks the disappearance, at least in terms of names, of two flagship authoring and post-production companies in Central Europe.

Story filed 22.04.13