Volusion Declares Chapter 11 Bankruptcy

Volusion Declares Chapter 11 Bankruptcy

Friday, August 14, 2020Eric Zegarski

More Information About Volusion's Chapter 11 Declaration 

eCommerce solutions like Shopify and BigCommerce are experiencing tremendous success in 2020. Shopify’s stock price is setting record levels and BigCommerce had their IPO in early August. While these platforms are enjoying growth, it’s not all peaches and cream for all eCommerce solution providers. Last year, between September and October 2019, Volusion experienced a hack that effected more than 6500 of the 30 000+ merchants using their platform.  

On July 27th 2020, Volusion started the process of filing for Chapter 11 bankruptcy. Volusion released a statement in August explaining their intent for filing bankruptcy. The full press release can be read here. In this press release, Volusion makes it clear that their intent is to support their merchants.  

“We want to be very clear—Volusion is open for business and is not going anywhere. We have sufficient cash on hand to continue to operate while we seek to recapitalize the company through the Chapter 11 process. Our level of services and support remain in place and unchanged. We are operating business as usual.” - Volusion  

What is Chapter 11 Bankruptcy?  

Volusion is still undertaking lot of risk with chapter 11. For those not familiar with chapter 11 here’s a little more info thanks to Investopedia.  

Chapter 11 is a form of bankruptcy that involves a reorganization of a debtor’s business affairs, debts, and assets, and for that reason is known as "reorganization" bankruptcy. Named after the U.S. bankruptcy code 11, corporations generally file Chapter 11 if they require time to restructure their debts. 

This version of bankruptcy gives the debtor a fresh start. However, the terms are subject to the debtor’s fulfillment of its obligations under the plan of reorganization. 

Chapter 11 bankruptcy is the most complex of all bankruptcy cases. It is also usually the most expensive form of a bankruptcy proceeding. For these reasons, a company must consider Chapter 11 reorganization only after careful analysis and exploration of all other possible alternatives. 

Some notable companies who have undertaken this type of bankruptcy in the past include General Motors, United Airlines, and K-Mart. There’s some light at the end of the tunnel. Historically speaking, companies that file for Chapter 11 usually have a good success rate recovering. General Motors as an example. For most companies it’s a harsh wakeup call that it’s time to change the way they do business.    

Options You Have as a Volusion Merchant:

Stay on Volusion  

With Chapter 11, Volusion will have several milestones they must achieve by a certain deadline. In addition, some business decisions will need to be approved by the courts. This is designed to protect you and various creditors the company has. Therefore, there is still some risk that Volusion might not make it out of Chapter 11. 

However, if that was to happen, it would not happen overnight. There would be enough warning upfront that you would have time to re-platform. In their press release, Volusion did state that they have good cash flow. Furthermore, current  

Volusion developers and agencies might start looking at other platforms if they haven’t already to diversify their product offerings. As long as Volusion maintains confidence with their customer base and developer pool, then it should be business as usual. However, if things do not go as planned, you will have to re-platform and deal with the associated costs.  

Move to an Alternative Solution  

If you’re a person who prefers to mitigate risk, then re-platforming might be an option for you. You can take advantage of Volusion’s promise to say in business to do your research. In the meantime, you can begin to scope out platforms that would be a suitable substitute for Volusion. If you’re not sure where to begin, we suggest looking at Shopify, BigCommerce, or WooCommerce. In addition, you might want to find a solid agency to have in your corner to assist with the transition. Below you’ll find brief profiles on each platform.  

Shopify powers over 1,000,000 businesses worldwide. The all-in-one commerce platform to start, run, and grow a business. From 2016 to 2019, businesses on Shopify contributed $319 billion in economic activity worldwide. Shopify has grown from 5 people in a coffee shop to over 5,000 across the globe.  Shopify and their employees are learners who thrive on change and seek to have an impact in everything they do. Learn More  

BigCommerce exists to help merchants sell more. They make every decision and measure every outcome based on how well it serves their customers. BigCommerce is made up of amazing individuals, but it’s only through teamwork that they achieve greatness. They’re committed to helping our customers by working together with equal parts humility and ambition. Learn More 

WooCommerce is committed to democratizing commerce and putting you in control of your own livelihood. Their core platform is free and open-source, empowering anyone to sell anything, anywhere. By pivoting from commercial themes to eCommerce, Woo quickly became the fastest-growing eCommerce platform on the internet, after passing seven million downloads. Learn More 

We have an in depth analysis of what merchants are better suited for Shopify and which ones are suited for BigCommerce here.  

Whatever Platform You’re On, eBridge Can Help  

Our integration solution is universal! You can add or remove systems with ease as your business grows and your needs change. We have pre-built solutions for Volusion, Shopify, BigCommerce, and WooCommerce. Our integration platform has pre-built connectors for all leading eCommerce platforms, ERP solutions, and 100s of EDI trading partners. As a result, we can implement an integration solution in a timely manner.  

In addition, eBridge is hosted on Microsoft Azure, therefore ensuring an almost 99.9% uptime and industry leading security. With an integration solution from eBridge, you can ensure that your commerce network is connected and communicating data bi-directionally. 

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