The sinking online soap creator laid off 25 of its 40 employees but will continue to produce its most popular dramas The Spot and The Pyramid, said Cybercast's spokeswoman Kay Dangaard. Under Chapter 11, a company continues to operate while it reorganizes its debt.
"The company has filed under Chapter 11 for bankruptcy, [and] all the layoffs were effective immediately," she said.
The company came online with a bang in 1995. It has run into cash shortages recently, however, even with an impressive list of some advertisers, including Sony, Eastman Kodak, Apple Computer, Toyota, and Visa.
Cybercast's troubles were closely watched by other Web-episodic producers, who still are searching for winning business formulas even as they bring TV's sizzle to the Web. The company's struggle became public last week after its financial problems were aired by an employee on Monday. The staffer said Cybercast was running out of money and that its four online soaps were fading, a prediction that proved only partly accurate.
The plot for the company thickened later in the week. Last Friday, the president of Cybercast, Sheri Herman, was removed from her post four days after she confirmed the company's cash crunch. Chairman Russell Collins took her place at the helm.
The company was also unsuccessful in raising cash from investors such as Paramount Digital Entertainment.
Scott Zakarin, the original creator of The Spot, offered to buy back the Web soap opera last Thursday. As of today, he still hadn't received any response from Cybercast.
"I don't want to see it go down," Zakarin said. "I hope they don't go out of business, but if they did, I felt it necessary to make an offer."