Terry Drayton

Count Me In may be down for the count -- permanently. Today, the troubled Bellevue online payments and registration company issued a statement saying that an involuntary Chapter 7 bankruptcy will proceed, meaning that a court-appointed trustee is expected to seize assets of the company.

All of the company's staff have been let go. And the 220 clubs that were owed about $5 million were notified of the change earlier today. Count Me In Chief Executive Terry Drayton was not made available today through a spokesman. In a statement, the former CEO of HomeGrocer.com said it was an "incredibly sad day."

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“It was my intention to repay every penny we owed to our clients," Drayton said.

Todd Pladson, president of Eastlake Little League in Sammamish, doesn't hold out much hope that the club will get its money back. "I suspect their asset base is de minimis, so the trustee won't have any cash to distribute to creditors, but maybe pennies on the dollar, if that," said Pladson. The club is owed about $65,000 to $70,000 through Count Me In, with the Little League expected to get by on cash reserves in the meantime.

The Nordic Skiing Association of Anchorage, Campfire USA Alaska Council and Matanuska Soccer Club filed the involuntary petition on December 22, asking the bankruptcy court earlier this month to take over the assets if the company could not make payments to the clubs.

Count Me In spokesman Mark Firmani said the bankruptcy filing made it difficult for the company to locate a buyer. "It put a hard stop on Terry's ability to make a deal or for anyone to step in and purchase CMI," he said. 

Meanwhile, the Washington state Attorney General's Office has fielded more than 80 complaints about the activities of Count Me In.

Full press release from Count Me In follows:

BELLEVUE – January 28, 2009 - Count Me In Corporation (CMIC) today announced it was unable to prevent an involuntary Chapter 7 bankruptcy petition and expects the court to appoint a trustee to take over the online registration and league management software company and handle liquidation of its assets.

On January 8, three Alaska-based sports club clients asked the Federal Bankruptcy Court to take over CMIC’s operations on January 28 unless the eight-year old organization could show it was paying its obligations as they became due.

Those clubs are among 220 clubs and organizations across the country that CMIC owes about $5 million in outstanding online registration fees.

“We’ve been working for months in this incredibly difficult economy to find a buyer for CMIC that would allow us to repay our clients,” said Terry Drayton, CMIC CEO. “We got very close in November and were very close again this week to securing a deal but the immovable deadline of the involuntary bankruptcy petition put us in an impossible position. “We asked the three clubs to withdraw their petition, as we didn’t think it was in the best interests of all clients, but they refused,” he added.

According to Drayton, CMIC was working with one well-qualified buyer, but the company withdrew their bid on Monday, concluding it could not complete the transaction by the January 28 deadline.

As part of Chapter 7 bankruptcy, the court appointed trustee will now take charge of liquidating CMIC’s assets and distributing the proceeds among the company’s debtors.

Drayton also announced that CMIC’s parent company Arena Group, Inc., which is not part of the bankruptcy filing, will keep all client Web sites up and running and continue to provide technical support, allowing the clubs and teams to continue to function normally while the trustee works to find a buyer.

“At least we can keep supporting the clubs for the time being and minimize their pain, including helping clients process credit card charge-backs,” Drayton added. “This is an incredibly sad day for our Count Me In Corporation clients,” continued Drayton. “It was my intention to repay every penny we owed to our clients.

Unfortunately this involuntary bankruptcy won’t help achieve that, but now it is out of my hands.” In the company’s eight years of operation, CMIC collected about $175 million for its clients and remitted $170 million, or more than 97 percent. According to Drayton, the company can account for every penny of the $5 million shortfall, noting the funds went to normal operating costs in incremental amounts such as improving technology and paying staff salaries over the past eight years.