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Bitcasa Insolvent – Lawsuit Update

Insolvent

Yesterday Bitcasa responded to the lawsuit forcing them with a temporary restraining order to stop the deletion of data that was not migrated to new plans or downloaded. The short version of the outcome of the lawsuit is that users can pay Bitcasa for a $99.00/month fee to help preserve their data on a new account to continue downloading their data. You can read the full PDF here. While this does not help eliminate the added cost of migrating to a new plan for Bitcasa users there is still room to argue about the cost and getting that money back from Bitcasa in the future, although that could be difficult given the next information.

 

What was more interesting about the court case yesterday is what Bitcasa tried to have sealed. Bitcasa tried to have several phrases sealed in the court record to essentially hide the state the company is in. The sealing motion was denied in its entirety. So now we have a very good understanding of the position that Bitcasa is in.

Below are some of the phrases Bitcasa wanted sealed. You can read them here on the PDF of the court document or here on Reddit.

Bitcasa seeks to seal the following phrases:

  • “Incremental changes can solve Bitcasa’ financial problems;”
  • “Insolvent, and with no new venture funding in sight;”
  • “But these changes scarcely made a dent;”
  • “These costs threaten Bitcasa’s very survival given the company’s cash position and existing debt;”
  • “After November 30, its ability to keep the lights on will depend on factors beyond its control;”
  • “Thus any extension of the TRO is likely to push Bitcasa into bankruptcy within weeks, if not days;”
  • “efforts, at great risk to its ability to survive as a company;”
  • “dire financial circumstances, the immense costs of offering a longer notice period;”
  • “In fact, the only legally recognized irreparable harm that can possibly result here is the bankruptcy of Bitcasa. Doran v. Salem Inn, Inc., 422 U.S. 922, 932 (1975) (being forced into bankruptcy is an irreparable harm that can justify injunctive relief);”
  • “the future of a company and the livelihood of its 60 employees;”
  • “desperate need to overhaul its business to avert bankruptcy and put the company on a path toward becoming a viable enterprise;”
  • “A company’s future, the jobs of sixty people, several years of work, and tens of millions of dollars in investment risk extinction if the Court extends the Plaintiff’s baseless request for a TRO to protect his meritless claims,” and so on.

What does it all mean? The short version is Bitcasa is on the verge of bankruptcy and this move to get rid of the unlimited plan is just another attempt at trying to turn things around. Apparently the cost of complying with the temporary restraining order was costing the company $67,000.00/day to keep the servers on.

While I feel for the employees of Bitcasa this situation has not come about suddenly and has been a result of many problems the company created since day one. Using Amazon for storage is not a cost effective solution. Backblaze knew that and went on to design their own storage pods. Aside from the cost of their storage Bitcasa has made several other moves that has now left the company less likely to become a viable enterprise, like ticking off and losing the trust of all of their users. As can be noted in one of the phrases that Bitcasa wanted sealed “But these changes scarcely made a dent;” clearly shows that getting rid of infinite users was not helping Bitcasa turn around, and has now essentially doomed the company since now no one will trust them with their data.

I would advise that anyone with data on Bitcasa start downloading their data now no matter what plan they are on and start looking at alternatives. This company could very well not exist after November 30th.

What are your thoughts on Bitcasa? Let us know in the comments below.

Update: The Unredacted documents have now been released. I have embedded them below for you to read. Overall if you use Bitcasa, download your files as soon as possible. They are 6.2 million in debt. More to come on this when I get a chance to read through the docs more.

Brian Taptich’s Declaration

Bitcasa’s Opposition

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3 Responses to Bitcasa Insolvent – Lawsuit Update

  1. Bob Johnson says:

    While Bitcasa may have issues because of the way it structured it’s business, we users have issues because Bitcasa has corrupted our data. This is pretty much across the board and not an isolated issue. Check out their support forum and you’ll get a better picture.

    Again, the data corruption is NOT an isolated issue. Anyone should definitely think twice before using this service. I wish I had.

    Bitcasa deserves to go out of business, best thing that can happen to protect future customers.

  2. Chris says:

    I know there’s a lot of bad feeling towards Bitcasa. But lets not forget that they started doing something very innovative with their original ‘infinite’ hard drive and developed some good software technology to make it work. It’s just a shame that all that hard work has been ruined by an accountant. Let’s hope that everything that was good about Bitcasa is not wiped from the planet and manages to find a way to live on in another form.

    It’s interesting you mention the Backblaze storage pods. I wonder if the storage pods, which are designed for data archiving, would have the performance required to meed the high demands of a hard drive in the cloud? Is the Backblaze storage pod the technology that Bitcasa needs to offer the infinite drive at a reasonable cost?

    • It was an innovative idea, but with software that never really worked and always seemed like it was broken. In many ways ExpandDrive (http://www.expandrive.com/expandrive) already works better than Bitcasa ever did.

      As for the Backblaze storage pods, yes they might be for archiving, but Netflix.com is using something similar in the Open Connect Appliance Hardware (https://openconnect.itp.netflix.com/hardware/index.html). Look familiar? If Netflix can stream movies from it Bitcasa could have used something like it to manage data.

      The reality is Bitcasa had an innovative software idea, but never got past it. Whether it was the investors wanting a quick return on their investment or other problems, in the end I don’t think Bitcasa is or ever will be a viable company at this point. They have lost all the trust with their early customers, their current customers and they have out priced themselves in the market.

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