Inability to combat in flight web access grounds SkyMall

Xhibit Corp. announced Friday that it and substantially all of its wholly-owned subsidiaries, including Phoenix based SkyMall, LLC, filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Arizona. The Debtors’ Chapter 11 cases are expected to be jointly administered under the caption “In re: SkyMall, LLC, et al..

According to the Company filings the Debtors intend to promptly seek the necessary relief from the Bankruptcy Court to pay some claims of employees and other claims to allow their business to continue under the direction of the Debtors as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court, and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court. The Debtors also intend to promptly seek approval from the Bankruptcy Court for a sale process to sell the SkyMall online retail business and substantially all other assets. The Debtors have engaged Cohn Reznick Capital Market Securities, LLC to advise regarding the sale, subject to approval of the Bankruptcy Court.

“We are extremely disappointed in this result and are hopeful that SkyMall and the iconic ‘SkyMall’ brand find a home to continue to operate as SkyMall has for the last 25 years,” said Scott Wiley, CFO and Acting CEO of Xhibit Corp..

When Bob Worsley found out last week that the parent company of SkyMall had planned to file for bankruptcy, the republican state senator from Mesa said he was very upset.

Worsley, a co-founder of SkyMall, the in-flight catalog known for its quirky products, in 1989 said it’s difficult to see the company struggle.

Worsley was one of four who founded the company to provide domestic passengers a shopping experience in the air. Airlines tucked the catalogs into seat backs and had exclusive agreements with most U.S. airlines, according to Worsley’s biography.

After a few initial setbacks, the company quickly became profitable after making changes to the way it delivered products to customers. At first, they brought the purchases to the gate, but customers didn’t want to carry the items, he said. They realized delivering the products to customers’ homes was more efficient.

They sold SkyMall in 2001, Worsley stayed on while the company transitioned for a couple years.

According to the documents filed SkyMall generated about $33.7 million in revenue in 2013 and $15.8 million for the first nine months of 2014.