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Amid legal woes, Slync seeks alternative to bankruptcy, winds down operations

Former Slync CEO Chris Kirchner was indicted in May on charges he swindled $25M from investors

Ex-CEO Chris Kirchner filed suit against Slync in September, seeking to have the FreightTech company pay his mounting legal bills. (Photo: Jim Allen/FreightWaves)

While logistics visibility platform provider Slync had hoped that new management and a $24 million cash infusion in February would be enough to save the FreightTech company after its former CEO was indicted on fraud charges, the company is proceeding with an alternative option to a traditional bankruptcy and plans to wind down operations and sell off its technology.

The timing of Slync’s filing Wednesday comes nearly three weeks after former Slync CEO Chris Kirchner — who was indicted in May on charges he swindled $25 million from investors for personal use — filed suit on Sept. 26 against his former employer for legal fee advancement and indemnification in Delaware’s Court of Chancery.

Kirchner’s suit seeks to have Slync pay his legal bills in his ongoing fraud case involving the U.S. Department of Justice and the Securities Exchange Commission. After Kirchner’s assets were frozen, a federal public defender was assigned to handle his case.

According to court documents, after Kirchner’s legal team initially reached out to Slync’s outside counsel on Aug. 30, Slync stated that it “will agree to advance” and that his legal team should reach out to Slync’s CEO John Urban “regarding logistics.”

However, less than three weeks later, Slync’s outside counsel told Kirchner’s legal team that Slync “purportedly lacks sufficient liquidity to fund advancement.”

After Kirchner’s firing in August 2022, Urban, who co-founded and grew GT Nexus into one of the world’s largest cloud-based software-as-a-service networks and also had served as a strategic adviser for Slync since 2018, was tapped as the new CEO and chairman of the board of Slync.


“We could not afford to grow the company and pay those legal fees at the same time,” Urban told the Journal of Commerce, which first reported the story. “It put the company in a position where we couldn’t raise capital from new investors and selling the company wasn’t an option due to liability concerns from potential suitors.” 

As of publication, Urban did not respond to FreightWaves’ request seeking comment.

Judge Mark Pittman of the U.S. District Court for the Northern District of Texas recently denied Kirchner’s motion seeking a 90-day continuance of his trial slated to start on Dec. 18 to prosecute his advancement claims against Slync in Delaware.

ABC filing

After discussing various wind-down options, Slync’s board of directors decided to proceed with an alternative to traditional bankruptcy proceedings known as an assignment for the benefit of creditors, or an “ABC.” 

According to an article posted by the Cornell Law School, a company like Slync trying to “purchase assets of a struggling company can avoid liability to unsecured creditors of the failing company.” ABC proceedings are more efficient, less costly and an alternative with a chance for recovery to creditors in contrast to other Chapter 11 or 7 bankruptcies.

According to Slync’s ABC petition, which was filed Wednesday in the Delaware Court of Chancery, its board has selected Chicago-based Development Specialists Inc. (DSI), a restructuring and insolvency consulting firm, to handle the process, which involves transferring Slync’s assets to DSI. The company is responsible for selling those assets in an expedited manner to pay back creditors. 

The petition, which was obtained by FreightWaves, states that Chintan Parekh, Slync’s CFO, contacted DSI to discuss Slync’s “lower revenue streams and unexpected legal expenses facing the company.”

Court filings state that Slync transferred approximately $440,000 in cash, accounts receivable amounting to around $476,000, and other business assets consisting of intellectual property, customer agreements and related assets to DSI. 

Slync has unsecured debts totaling around $1.5 million and is preparing a list of known creditors, which it will file with the court once completed, according to the petition.

The court filing states that Slync has elected to proceed with the ABC proceeding because the FreightTech company “maintains insufficient capital to continue to operate due to its financial underperformance and Kirchner’s [alleged] fraud.”

Matthew Leffler, known as the Armchair Attorney, who reviewed Slync’s ABC petition, said it’s likely that Slync chose this route because the company “actually has more assets than debts.”

“It’s a very small amount of money that Slync owes — it’s essentially close to a million dollars in cash, some laptops and then there’s the intellectual property,” Leffler told FreightWaves. “Slync likely has a path to sell its [intellectual property] and have someone make money.”

The ABC petition states the company reported a combined revenue of more than $1.7 million between 2019 and August 2022, but that it had never been profitable. Slync reported net losses of more than $3.7 million, $28 million, nearly $26 million and around $21 million for the years-ended Dec. 31, 2019, through 2022.

What happened?

The logistics visibility platform that worked with shippers, third-party logistics providers and carriers was co-founded in 2017 by Kirchner along with Rajan Patel, the startup’s chief product officer, and Varun Dodla, its co-chief technology officer.

Under Kirchner’s leadership, Slync, which was once valued at $240 million, raised nearly $70 million, including the $60 million Series B funding round that closed in February 2021, which was led by venture firm Goldman Sachs Growth, ACME Ventures, 235 Capital Partners, Correlation Ventures and other existing investors.

Soon after the company received the $60 million fund raise in 2021, court filings in a wrongful termination lawsuit by a former company vice president claim Kirchner bought a 2010 Gulfstream G550 jet for $16 million. It has since been sold.

Former company executives who were fired by Kirchner said they never had access to the company’s accounts and brought their concerns to the board, stating that Kirchner was the only one with access to its investment account, which included the $60 million Series B funds.

Prior to his firing in August 2022, Kirchner had come under scrutiny after he failed to pay employees for months, used his private jet to fly to celebrity golf tournaments and attempted to buy an English soccer team. 

While Kirchner on behalf of Slync initially blamed an internal administrative error, then later stated its payroll woes stemmed from its inability to liquidate funds in a timely manner — investors, led by Goldman Sachs — agreed to inject more funding to pay employees. A source confirmed that U.S. and Canadian employees were paid after being owed around $3.8 million.

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Clarissa Hawes

Clarissa has covered all aspects of the trucking industry for 14 years. She is an award-winning journalist known for her investigative and business reporting. Before joining FreightWaves, she wrote for Land Line Magazine and Trucks.com. If you have a news tip or story idea, send her an email to [email protected].