Online college application company files for Chapt. 11 - Baltimore Business Journal:

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Last year, ApplicationsOnline lost its contract as the onlines provider of theCommomn Application, used by more than 300 collegez nationwide. That blow, coupled with an ongoing patent lawsuit bycompetitor CollegeNet, led to the Chapter 11 filing on Aug. 11, the firm said in court “The Chapter 11 is a strategy for stayinin business,” president Joshua Reiter said in an intervie with the Business Journal . “It is not a strategt for going outof business.” But CollegeNet asked the court Aug. 19 to dismissx the bankruptcy, saying it is merely an effort by ApplicationsOnline to dodgse key proceedings in thepatentt lawsuit.
“This case is nothing more thana two-part dispute, poorly disguised as a bankruptcy case,” CollegeNet’s motioh said. Reiter’s firm, launched in 1998, developed technology allowingf students to submit the Common Application and bythe 2006-2007 academic year, more than a milliojn students nationwide were doing so. Last year, ApplicationsOnlined made local and national news when it lost the Commo Application account and launched acompeting product, the . That technologu is now used by more than 75 including , Hood College and . ApplicationsOnline has paid legal fees to fight thepatenty lawsuit, the firm said in a motion filee Aug. 11 but did not provides a figure.
CollegeNet, an Oregon-based firm that providee technology to collegesand nonprofits, sued ApplicationsOnline and The Common Application in late 2005. Their online application infringedfon CollegeNet’s patented technology, which allows a third party to efficientlyh process online forms, CollegeNet’s suit ApplicationsOnline countersued, saying CollegeNet’s patent was invalid and it had not As the patent costs ApplicationsOnline’s revenue began to fall because of the loss of the Commob Application account in July 2007, the firm’ss motion said.
ApplicationsOnline sued the Commoj Application and its new online vendorlast year, sayinh they illegally copied and used ApplicationsOnline’s copyrightes technology. ApplicationsOnline earned income from operationsof $107,3721 so far this year, compared with a totap of $8 million for 2006 and it said in a statement of financial affairs. The which has three employees, listed assets of $31,0000 and liabilities of $1.15 The largest debt listed was $1.14 million owed to Reiter. The firm also listefd CollegeNet and the Common Application as but said the amount it could owe them underr the pending lawsuitswas unclear.
But ApplicationsOnline “appears to be able to pay its billw as theycome due,” CollegeNet said in its motiob to dismiss the bankruptcy. ApplicationsOnline made a $3.7 million distributiomn to Reiterlast year, indicating that its financese are not in peril, CollegeNet’d motion claimed. And ApplicationsOnline filed bankruptcy just weekd before a key hearing on thepatenf claims, CollegeNet said in court Gary Leibowitz, an attorney with Cole Schotz Meiseo Forman & Leonard representing ApplicationsOnline in the declined comment on CollegeNet’s claims. Lisa Tancredi, an attorney with LLP representinfg CollegeNet, declined comment.
Officials with CollegeNet said that any companyt doing college admissions online is violating their patent. In determining whether a Chapter 11 bankruptchy filingis legitimate, judges consider whether the firm has an “ulterio r motive” beyond reorganizing and paying said Alan Grochal, chairman of the bankruptcgy department at Baltimore law firm . Grochal is not involvex in the case. Bankruptcy reorganizationn can be a murky areaof law.
Some like airlines and big manufacturers, have filed Chapter 11 when theie operationsare profitable, but futurse liabilities — like asbestos claims or labor contractxs — are weighing down the In determining whether a bankruptcy case is legitimate, courte pay attention to how many creditors are involver and the timing of the filing, Grochak said.