Online grocer Webvan Group Inc. announced today that it has ceased operations and intends to file for protection under Chapter 11 of the U.S. Bankruptcy Code. The Foster City, CA-based company said it has no plans to resume operations and it will pursue an orderly wind-down of its operations and sale of its assets and business.
“Webvan has weathered numerous challenges, and in a different climate I believe that our business model would prove successful,” said Webvan CEO Robert Swan. “At the end of the day, however, the clock has run out on us.”
According to Swan, the company terminated about 2,000 employees as a result of its announcement. It also operated in the Chicago, Los Angeles, Orange County, CA; Portland, OR; San Diego, San Francisco and Seattle areas. It recently shut down its operations in the Dallas and Atlanta areas.
Webvan also said it will not follow through with a planned 25-to-1 reverse stock split, which recently had won shareholder approval. The company had its shares listed on the Nasdaq market and wanted to do the reverse split to help maintain its spot. Trading of Webvan shares, which traded at $9.31 a year ago and closed at 6-cents Friday, was halted.