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Lily Robotics Auctions Off Assets

Lily Robotics Auctions Off Assets, But Many Customers Are Still Waiting For Refunds.


Aaron Tilley, FORBES STAFF

Lily Robotics, a much-hyped San Francisco drone startup that crashed and burned last January, this week successfully auctioned off the remaining bits and pieces of the company for $750,000.

The assets were split between two parties: an entity called LR Acquisition bought all of Lily’s patents and technology know-how, including around 70 prototypes of the Lily drone, for $450,000; and Mota, a San Jose-based drone company, received the Lily branding rights — including trademark and customer list — for $300,000.

GoPro, which is attempting to break into the drone market with its Karma drone, offered $250,000 for the drone patents alone in an unsuccessful bid split with Mota for a total of $700,000. The action-camera maker kicked things off with a baseline bid of $100,000 for the patents.

Curtis Solsvig of Goldin Associates served as the chief restructuring officer and was in contact with 34 parties interested in buying up Lily assets. Sheon Karol of Dak Group reached out to 49 potential bidders.

With the three-day auction completed, the big question that now remains is who gets paid back. That will be determined in future bankruptcy court proceedings, but there’s lots of competing interests.

When the company announced it was shutting down in January, it promised a full refund of the $38.4 million it received from 61,450 customers. So far, Lily has doled out refunds to about half of the $38.4 million in pre-orders. The company still has almost enough to pay back the remaining pre-order customers, but it may not be enough with so many competing creditors, said a source close to the bankruptcy proceedings. There are a number of other players that Lily may still owe money to — including contract manufacturers, investors and banks.

The San Francisco District Attorney’s Office, which filed a consumer-protection civil suit against Lily amid its shutdown in January, said it would remain involved in the bankruptcy court proceedings to try to get back the remaining refunds in full.

“Our number one priority is to do everything we can within the court process to get consumer’s money back,” said a spokesman for the District Attorney’s Office.

Lily launched in 2014 with a viral video, leading to the millions of dollars in pre-orders and venture capital investment. The launch video advertised a cute-looking autonomous quad-copter drone that could follow a user around and capture high-definition video. The startup abruptly closed in January, saying it was “racing against a clock of ever-diminishing funds” and was unable to raise a new round of funding to pay for manufacturing. In an investigation, the District Attorney found emails showing Lily CEO and cofounder Antoine Balaresque allegedly lying to consumers.

“I am worried that a lens geek could study our images up close and detect the unique GoPro lens footprint,” Balaresque wrote in an email to video production company CMI Productions about the launch video. “But I am just speculating here: I don’t know much about lenses but I think we should be extremely careful if we decide to lie publicly.”

The company and its two founders, Balaresque and Henry Bradlow, are still under investigation by the District Attorney. But Balaresque may still end up with another job at the end of all of this. According to a court transcript of the auction proceedings, Balaresque is in discussion to join LR Acquisition.

There’s not much information about LR out there. Lawyers representing LR in the bankruptcy auction did not return requests for comment.

Follow me on Twitter @aatilley or send me an email: atilley@forbes.com

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