After Supreme Court Rules Against it, Digital TV Provider Aereo Files Bankruptcy

Just a year ago, Boston-based digital TV startup Aereo had the potential to completely revolutionize the way people watch television.

Since then, Aereo has been on a gradual downward descent starting with a June Supreme Court ruling that the company’s services violate copyright law. And on Thursday, Nov. 20, Aereo finally filed for Chapter 11 bankruptcy help, facing lawsuits from a number of television networks, according to the Boston Globe.

Aereo’s service allowed its customers to purchase a device that would record broadcast television programs and store them in the cloud for customers to watch again at any time. Broadcast networks claimed the company stole its programming — programming that cable companies and their customers rightly paid for.

At the start of the Chapter 11 bankruptcy timeline, filing bankruptcy with a Chapter 11 bankruptcy attorney “essentially freezes all existing lawsuits against the company,” Bruce Ewing, a New York intellectual property lawyer, told the Boston Globe.

“It may be that Aereo is hoping to somehow go through the bankruptcy process and emerge on the other end free of any liabilities to the broadcasters,” Ewing explained. “Whether or not that is possible is unknowable at this point.”

Companies typically opt for the Chapter 11 bankruptcy timeline when seeking debt reorganization. This means Aereo will create a repayment plan for its debts, but won’t be able to actually cast the debt off.

Aereo also likely sought out a Chapter 11 bankruptcy because of the protection it grants companies against lawsuits.

The company’s chief executive, Chet Kanojia, wrote in a statement that Aereo’s bankruptcy would protect it against “the extensive cost and distraction of defending drawn out litigation in several courts.”

Even with this protection from legal costs associated with its pending lawsuits, it’s unlikely that Aereo will be able to recover from its bankruptcy. The Boston Globe reports that earlier this month, Aereo closed its Boston office and laid off 43 local employees. Since new investors will be hard to come across, it’s probable that Aereo will shut down eventually.

What are your thoughts on Aereo’s rapid decline into the Chapter 11 bankruptcy timeline? Will the company ever be able to recover and create a service that respects the Supreme Court’s ruling? Share your thoughts with us in the comments below.