OnLive sold for just £4.8m

The remnants of OnLive, the games streaming service that recently dodged bankruptcy by a whisker, were sold to a venture capitalist for just $4.8 million, according to a letter obtained by the Mercury News.

OnLive was sold to Grey Lauder of venture capitalist firm Lauder Partners after laying off all of its employees in August 2012.

OnLive’s holding company, the Palo Alto gaming company had outstanding debts of at least $18.7 million, excluding money it owed in the future for leases and other contractual obligations, according to the letter, which was sent to OnLive creditors last month.

Full details of the deal were not disclosed, but figures in the letter indicate that the company’s creditors will end up getting no more than about 26 cents on each dollar they were owed.

The letter details that OnLive, which had previously raised more than $40 million from AT&T, HTC and other major investors, had been exploring a sale or another investment for a “substantial period of time”, as noted by Joel Weinberg, the CEO of Insolvency Services Group, which is handing the company’s bankruptcy-like process.

Mercury News did not receive a comment from Weinburg, but his lawyer confirmed authenticity of the letter.

Running out of cash, the company decided to liquidate its assets and let go of its workforce through an assignment for the benefit of creditors, a bankruptcy alternative that operates under state law.

Lauder, who reportedly made his bid just days before a total collapse, created an as yet unnamed successor company that bought the assets, kept OnLive’s game service up and running and offered to hire back almost half of the company’s workers.

Steve Perlman, OnLive’s founder and CEO, was expected to stay on with the successor company but decided to leave less than two weeks after the insolvency.

By comparison, Sony picked up game streaming service Gaikai for $380 million.