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Nets Inc. files for Chapter 11

CEO Jim Manzi announces the company is filing for bankruptcy and laying off most of its employees.

Nets Incorporated has filed for Chapter 11 bankruptcy protection and is laying off most of its 200 employees, the company said today.

Employees were notified of the decision at 3 p.m. EST by chief executive Jim Manzi in a teleconference. Company spokesman Richard Eckel said that Nets Incorporated will maintain its service, an electronic marketplace for buyers and sellers of industrial goods, while it reorganizes the company.

But it's not clear what will be left for the company to reorganize. Eckel said it is laying off all but a dozen or so employees. He said the company was filing for Chapter 11 due to poor sales and an inability to secure financing.

"In the past few weeks, I've personally provided bridge financing to the company to provide us the opportunity to successfully execute the business concept," Manzi said in a statement. "But our financing deadline has passed, and we do not have the capital to build from strength. As a result, the board of directors has decided to reorganize the company utilizing Chapter 11."

And in a memo to employees, Manzi said that in recent weeks he alone has funded the company at a cost of around $500,000 a week.

He noted in his memo that he had managed to arrange substantial commitments from some long-term investors in Japan, but that was not going to be enough to build from its existing base.

Today's announcement could be the end to a troubled history for the company. Last February, Nets Incorporated pulled the plug on AT&T Business Network, a news and information service Web site, as part of an effort to sharpen the company's focus on its core commerce business.

Nets Incorporated was formed last June after by former Lotus Development CEO Manzi--and AT&T New Media Service merged. The company's primary business is selling manufacturing equipment and parts to customers over the Internet.

Manzi became head of Nets Incorporated after joining early in January 1996. Before that, Manzi was head of Lotus, leaving that company shortly after IBM acquired it.