When ENGINE Media Exchange (EMX) and its parent company, Big Village, filed for bankruptcy last week, it came as a shock to many in the digital ad industry.
But it probably shouldn’t have.
The now-defunct SSP had been dogged by rumors of nonpayments, delayed payments and mismanagement since early last year. And its CEO, Michael Zacharski, left the company in January, right before the bankruptcy filing.
A closer look at Big Village’s bankruptcy filing offers a glimpse at just how much debt had piled up.
According to the filing, Big Village and EMX owe money to between 5,001 and 10,000 creditors. The companies claim to have between $10 million and $50 million in assets – and between $50 million and $100 million in liabilities.
“There were some major red flags,” said Nick Carrabbia, EVP at OAREX Capital Markets, a revenue exchange that offers liquidity financing for advertisers and publishers.
“Within the Reddit AdOps community, multiple threads from various supply partners discussed abnormal payment delays and a lack of communication and transparency from the EMX team,” he said.
OAREX also noticed payment abnormalities in its own dealings with EMX. During the second half of 2022, EMX paid late 100% of the time by an average of 19.5 days, Carrabbia told AdExchanger.
“When other supply partners publicly comment that they are experiencing the same issues, and your demand partner is noncommunicative or giving you the runaround on when you’ll be paid, it’s more often than not a sign to move on,” he said.
EMX’s top 30 creditors
Big Village’s bankruptcy filing also includes a list of the 30 creditors with the largest unsecured claims against EMX. Seven companies listed are owed more than $1 million.
“Unsecured” in this context means the creditors have no liens against EMX or legal right to collect specific assets or property to pay back the debt they’re owed.
That doesn’t mean these unsecured creditors are out of luck. But it does mean they’ll have to wait for a court filing to determine how much of EMX’s remaining cash or assets can be disbursed to repay them.
While the bankruptcy filing indicates that funds will be made available to pay back unsecured creditors, these companies will likely only receive pennies on the dollar for the debt owed.
CPX Interactive, now known as Digital Remedy, is listed as EMX’s largest creditor with a claim of nearly $6.6 million.
Several big names in TV and CTV also rank among EMX’s top creditors.
Pluto TV is second on the list, with a claim of nearly $4.5 million, and TV manufacturers Samsung and Vizio are owed $1.1 million and $375,000, respectively. Hulu has a roughly $740,000 claim, and Philo is owed $430,000. CBS and NBCU are owed $600,000 and $350,000, respectively, while Roku has a claim of just under $350,000.
USA Today publisher Gannett, meanwhile, has a $440,000 claim against EMX.
Major tech companies also appear among EMX’s top creditors.
Yahoo, which recently shut down its SSP, is owed $2.8 million, while Google appears twice on the list. AdWords has a roughly $1.7 million claim against EMX and an entity listed as Google’s “collection department” is claiming $640,000 in nonpayments.
Amazon Web Services is owed nearly $900,000, and Microsoft’s Xandr is owed around $830,000.
Other ad tech companies with claims include:
- Sovrn (formerly known as Proper Media) – owed $1.2 million
- AppMonet – owed $900,000
- Taboola – owed $750,000
- Ugam – owed $580,000
- ironSource – owed $560,000
- Consumable – owed $510,000
- Mediavine – owed $440,000
- Vidazoo – owed $390,000
- Content IQ – owed $380,000
- GumGum – owed $360,000
What next?
Because Big Village and EMX filed for Chapter 11 bankruptcy, the company will undergo a reorganization rather than a liquidation, which would have been the case if it had filed a Chapter 7 bankruptcy claim.
And since this is a Chapter 11 filing, EMX could possibly emerge from bankruptcy after its reorganization and resume its business.
But in the meantime, it remains to be seen how EMX’s day in court will play out or how much compensation its creditors will be entitled to.
