Last Friday, closed-end custom PC maker Artesian Builds filed for Chapter 11 bankruptcy in California with more than $ 3 million in liabilities on its balance sheet, including an estimated $ 1.37 million in unfulfilled orders, according to court documents. Its designated restructuring officer is now seeking buyers for the company’s assets, which include an estimated inventory of $ 917,595.
Artesian Builds collapsed dramatically earlier this year, shutting down operations on March 8, releasing about 50 employees in California and North Carolina. Artesian’s insolvency was apparently triggered by a wave of paybacks following a controversial draw livestreamed by company owner and CEO Noah Katz, but two former employees who spoke to PC Gamer on condition of anonymity said it was Katz’s long-term poor management that put business in such an uncertain situation to begin with.
Another former employee had a more positive view of Katz, hoping the company would survive, but said the CEO was inexperienced as a manager and had said so much himself. All three former employees said Katz had already been looking for new investors before the controversial livestream.
According to documents filed by Artesian, the company lost over $ 1.6 million last year. It owes over $ 450,000 to two PC component distributors and has over $ 200,000 in credit card debt. There’s also a $ 1.2 million family loan on the books, and it owes earned paid off to former employees (even though former employees got their last paychecks according to those we spoke to). An estimated $ 1.37 million in deferred revenue from unfulfilled orders is shown in the most recent balance sheet.
In the now defunct Artesian Builds Discord server, a few customers have said that they managed to get their money back by requesting rebates from their credit card companies. Thousands of others, however, owe money. There are at least “hundreds” of gaming PC orders that were never shipped, a former employee said. Two customers who contacted PC Gamer say their orders had already been delayed by months when the company shut down. A customer whose son ordered a $ 5,000 PC in December last year was told in February that orders placed in October last year were still being built.
Supply issues have really been an issue for PC builders over the last few years, especially when it comes to GPUs. However, according to two former artesian workers that PC Gamer spoke to, another problem was that Katz was selling cryptocurrency mining systems, further delaying orders for gaming PCs. Artesian was originally a supplier of mining rigs, but switched to gaming PCs in 2019, according to a report from Inverse. Apparently it did not turn completely. An income statement for 2021 in the bankruptcy application includes $ 395,000 in “Mine Business Revenue”.
Bankruptcy notices are being delivered now, and a creditors’ meeting is scheduled for May 16.
Chapter 11 bankruptcy allows a company to continue operating while paying off its debts under a plan negotiated with creditors. However, Artesian has been closed since the beginning of March, and the chief restructuring chief who handled the company’s affairs indicated to PC Gamer that its assets, including trade names, will be sold.