Reports suggest that Matthew Freud, the 15-month-old company’s co-founder, had had no luck trying to raise money over the last six months because investors were simply not interested, despite what he termed as the organisation’s robust business model.
Few job losses are expected as most functions such as marketing and technology support are undertaken externally, but as little as a year ago Toyzone had been expected to generate £250m on flotation.
The move follows hot on the heels of eToys’ decision ‘that it had no alternative other than to file for bankruptcy protection’ after declaring its shares ‘worthless’.
After failing to find a buyer, the e-tailer concluded that ‘its outstanding liabilities, which totalled approximately £186m as of 31 January 2001, will substantially exceed the value of any proceeds or assets that may be received in a strategic transaction’.
eToys has already informed its staff, including 74 employees in the UK, that they will no longer have jobs as of 6 April. The website will close on 8 March and the time in between will be spent winding up the business.
Trading in the firm’s shares has also been suspended and will remain so until eToys has satisified Nasdaq’s request for further information. The last sale price of its stock was $0.094, compared with a peak of $80 in 1999.