Consumer Review Files for Chapter 11

MtbReview.com's parent company, Consumer Review, filed for Chapter 11 bankruptcy protection to cope with $18 million of outstanding debt. The company, which owns RoadBikeReview.com and other web sites, is finalizing a sale to an unnamed buyer.

"This is a voluntary reorganization plan to change ownership and relieve some of the debt we incurred in the last four years. We are not going out of business," said Paul Wassem, Consumer Review's president.


The company has approximately $18 million in long-term debt, mostly owed to investors that funded the company through three rounds of fundraising. There are no secured creditors.


The company signed an asset purchase agreement with an unnamed buyer that could be completed next month. Under the agreement, Wassem and company founder Francis Cebedo would continue to run the company as an autonomous division of its new owner. The buyer is not in the cycling or outdoor industries.


Consumer Review is generating about $2.5 million annually--enough to sustain itself until it breaks even financially, said Wassem, adding that he expects this to happen in the next four months.


Like many internet-based companies, Consumer Review overvalued its potential for revenues and did not focus strongly enough on strict business principles, Wassem said. "But we survived. We didn't run out of money and we're still moving forward."


MtbReview, the first of Consumer Review's 18 web sites, continues to be the company's financial darling, bringing in nearly half its revenue. The site registered 500,000 unique visitors in May, Wassem said. The company now operates 10 sites and has 18 employees. It had employed as many as 72.