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Refunds for all After Lily Robotics Files for Bankruptcy

Posted on in Chapter 11

Refunds for all After Lily Robotics Files for Bankruptcy

Lily Robotics, a startup that quickly amassed tens of millions of dollars in pre-orders from around the world following its release of a viral video showing its prototype of an autonomous flying camera in 2014, has filed for Chapter 11 bankruptcy protection. After close to three years, numerous loans and investments still could not help the company and its vendors build a drone that worked to the design's specifications.

The company promised refunds to those who pre-ordered the product. Because a working product was not produced and there is no inventory to sell, Lily Robotics is selling another asset to recoup as part of its bankruptcy - its patents and other intellectual property.

Lily Robotics' Asset Auction will Include Intellectual Property

Intellectual property can be as valuable as physical assets. Lily Robotics is auctioning the following:

  • Its patents for the flight and operation mechanisms of its drones; and
  • Other intellectual property, such as the designs and names for the products.

The value of a piece of intellectual property can be high, depending on the nature of the property and the brand or creator with which it is associated. Intellectual property can be any type of work or creation, such as a manuscript, an image, a piece of music, a piece of software, a prototype, an invention or innovation, or a design. Creators protect their intellectual property rights through trademarks, copyrights, and patents, depending on the type of property. Although some exceptions apply under the fair use doctrine, intellectual property typically may not be used by a party other than the creator or owner without their explicit consent. Licensing a piece of intellectual property is a way for a creator to give other permission to use their work in a commercial manner.

A Short-Lived Startup

Building a successful business is hard. Maintaining that success to remain profitable can be even more difficult. Lily Robotics is not unique among technology startups, which can easily amass substantial amounts of capital in their early stages yet still wind up struggling or bankrupt only a few years later. Enough capital to launch a business is only one part of a successful startup recipe. Others include an effective management team, favorable market conditions, and a sustainable business model.

During Chapter 11 bankruptcy, companies generally auction any valuable assets they have to try to recover enough money to repay their creditors. In Lily Robotics' case, their intellectual property is their most valuable asset. With another management team, Lily Robotics' autonomous flying camera may be able to come to fruition.

Work with an Experienced Libertyville Bankruptcy Lawyer

If you are considering filing for bankruptcy in the near future, first speak with an experienced bankruptcy lawyer about your rights, your options, and the bankruptcy process. Our team of experienced bankruptcy lawyers at Newland & Newland, LLP can answer any questions you have during your initial consultation. Contact our firm today to schedule your consultation in our office. We serve clients in the Arlington Heights, Palatine, Rolling Meadows, Libertyville, Mundelein, Buffalo Grove, Schaumburg, Elk Grove, and Itasca areas.

(image courtesy of Caleb Woods)

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