Fishers-based tech firm Netfor files for bankruptcy
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The founder and CEO of Fishers-based IT firm Netfor Inc. says an ill-timed investment into new office space has pushed the company into bankruptcy, but he said the company will continue to operate as usual while it works to restructure its finances.
Netfor filed for Chapter 11 bankruptcy protection Thursday, declaring assets of between $1 million and $10 million and liabilities of between $500,000 and $1 million.
Chapter 11, or reorganization, bankruptcy is for companies that intend to remain in operation and repay their creditors over time.
Netfor founder and CEO Jeff Medley said the company’s clients and its 120 employees will see “absolutely no impact” to the company’s daily operations as a result of the bankruptcy.
Netfor, which launched in 1995, is a business-process outsourcing firm that offers IT help-desk services; fulfillment services for software, hardware and devices; and on-site IT technicians.
Medley said the root of Netfor’s financial problems traces to 2018, when the company moved into a significantly larger—and more expensive—office space.
Netfor had outgrown its previous 6,500-square-foot office, Medley said, so the company sold that building and moved to a new nearby office, also in Fishers—an 18,000-square-foot space at 12115 Visionary Way that would serve not just the company’s employees, but also the clients who came to the office for meetings.
Netfor spent about $4 million on major renovations on the Visionary Way office, which had previously served as a regional client center for Charles Schwab & Co.
“We wanted a glorious, very nice, well-designed and well-decorated space,” Medley said.
The monthly cost of that new space, Medley said, was $34,000 a month—nearly triple the $13,000 Netfor had been paying in mortgage payments, utilities and other expenses at the old site.
But when COVID hit in early 2020, the financial equation fell apart.
“That vision did not pan out with the pandemic and how it changed the landscape of what we do,” Medley said.
Employees were suddenly working from home, and the advantage of being a local vendor evaporated when everyone was working remotely and connecting via video meetings, Medley said.
“With COVID, facilities didn’t matter any more,” Medley said. “It changed the playing field.”
At the same time, Medley said, Netfor’s revenue stagnated for about a year because customers pulled back on their spending amid the uncertainty caused by the pandemic. Netfor’s restaurant-industry clients were especially affected, he said.
Medley said Netfor tried for more than two years to sublease the space. It considered uses ranging from a coworking space to a rock-climbing gym, but nothing panned out. The company officially vacated the building in July 2021 and is now operating as a fully remote company with employees in seven states.
Medley said the threat of litigation was what triggered Netfor to file for bankruptcy protection now, but that the company is working on a plan to satisfy its creditors. “We want to pay them back,” he said.