OwnCloud Issues Statement Over Today's Nextcloud Fork, OwnCloud Inc Closes Up Shop

[phoronix]

Phoronix: OwnCloud Issues Statement Over Today's Nextcloud Fork, OwnCloud Inc Closes Up Shop

This morning it went public that ownCloud was forked into Nextcloud by many of the former contributors including ownCloud's founder. The ownCloud company has now responded...

http://www.phoronix.com/scan.php?page=news_item&px=OwnCloud-Responds-To-Nextcloud

[torsionbar28]

"Our main lenders in the US have cancelled our credit. Following American law, we are forced to close the doors of ownCloud, Inc. "

Maybe it's a poor translation and I'm being too harsh, but what part of American law requires a business to close if it doesn't have a line of credit? Maybe it should have read "following our empty bank accounts, we are forced to close the doors". There is no law that requires businesses to maintain an open line of credit.

[DDF420]

So the Owncloud founders sought venture funding, in exchange for preferred stock,thus forming Owncloud Inc
Surprise surprise those investors that dumped millions into the investment want a return and the founders find themselves in constant conflict with shareholders.
Owncloud founder makes a monster profit from the shares deal,no longer likes having to appease those who invested,rounds up his mates, resigns,fork the project,then go about taking customers away from those investors that helped them in the first place,leaving Owncloud Inc to close shop.

This Owncloud founder sounds like a complete asshat.Glad i didnt invest with this loser.

[GraysonPeddie]

After I read the headline and a few sentences about ownCloud responding to NextCloud by closing up shop, my reaction is this:

"What's wrong with you!?

Unh...alright. Back to reading the article..

Update: Ah... So the ownCloud Foundation lives on. Corporations, corporations, corporations...

[lathiat]

"Our main lenders in the US have cancelled our credit. Following American law, we are forced to close the doors of ownCloud, Inc. "

Maybe it's a poor translation and I'm being too harsh, but what part of American law requires a business to close if it doesn't have a line of credit? Maybe it should have read "following our empty bank accounts, we are forced to close the doors". There is no law that requires businesses to maintain an open line of credit.

Commenting from Australia but I assume the laws in the USA are similar... below is highly simplified so please read it for what it is, a grossly simplified overview of the process and please go and read better resources if you want to know more about the actual ins and outs.

A company must be "solvent" in order to continue trading, that is it can (or at least expects) to be able to pay all of its due debts and invoices on the date they are due. If the company cannot do that, they are considered insolvent and must cease trading and wind-up the company. This includes not only loans, but general company expenditure for example on office space, employee wages, taxation, etc. These dues are often paid by either (a) cash on hand, (b) revenue from sales or (c) a line of credit [one form of investment]

I'm not sure of the exact legal rationale but ultimately if you cannot repay your debts the company must close, otherwise you will be putting the company further into debt, taking more money from creditors than necessary had the company simply been wound up... the company is not sustainable.

Trading "insolvent" is prohibited and you must begin the process to wind-up the company.. in some cases the company would simply become insolvent if it kept trading (expenses are greater than income)... if wound up, after selling all of the companies assets ("liquidation") it can pay all remaining debts, bills, wages, taxes, etc and then the business is closed in an orderly fassion.

In other cases, even after selling all of the companies assets, it may not have enough money to repay all outstanding debts (common if the company has taken out a loan to fund its operations in the early stage of a business). In this case, the company is considered bankrupt and would likely declare/file for bankruptcy. The process of bankruptcy would generally mean that the company is liquidated to pay as much of the debt as possible, but after that the creditors are out of pocket and the company is closed. This is where the 30 day term really comes in, because (at least in Australia) if the Director's of the company do not begin the process within 30 days of becoming aware that the company is bankrupt then they may become *personally* liable for the debts of the company, because they were personally negligent in it's operations. If they do everything correctly, only the company is bankrupt and their personal finances and properties would not be affected because the company is a separate financial entity.

So as an example in this case, perhaps the company is being loaned $100,000 per month and is currently not making any repayments. All of that money is being spent on office space and wages. Now that the line of credit is revoked, they cannot make payment on those dues and thus the company must close.

There are many ways that this is further complicated because, as I said, this was a super simple overview, here are some examples:
- It is possible in some cases to "restructure" the company in some way.. maybe another investor/loan provider is found or the existing credit provider may agree to provide more credit in return for a bigger share of the company or changes in terms on those shares, etc. Then the company can continue and no longer needs to wind-up.
- Generally in these cases, many credit providers will actually take control of the company (even if its just being liquidated).. in this way the company "founder" may not have any say in what occurs, for example.. the creditors may choose for example to sell the "customer base" including contact details to another company because they can get paid $100,000 to offset the debts. This may be morally objectionate by the "founder" but they may not be able to do anything about it. The same goes for selling the company to a competitor. This often results in friction where "founders" or customers of the company feel betrayed etc. You can see that kindof thing here in this case, not so much in the liquidation phase but certainly in the company phase these same kind of disagreeances are occurring.
- Even if they enter the bankruptcy process in time, that doesn't entirely absolve the directors of personal liability if they were later found negligent in some other ways, or to have extracted unreasonable amounts of money from the business before it went bankrupt, etc.. it gets very complicated quickly.


That was much longer than I intended it to be but hopefully it at least gives you a bit of an idea.

[torsionbar28]

So the Owncloud founders sought venture funding, in exchange for preferred stock,thus forming Owncloud Inc
Surprise surprise those investors that dumped millions into the investment want a return and the founders find themselves in constant conflict with shareholders.
Owncloud founder makes a monster profit from the shares deal,no longer likes having to appease those who invested,rounds up his mates, resigns,fork the project,then go about taking customers away from those investors that helped them in the first place,leaving Owncloud Inc to close shop.

This Owncloud founder sounds like a complete asshat.Glad i didnt invest with this loser.

Yikes, if this is how it played out, and it certainly sounds plausible - even probable, this is one skeezy dude. His unethical actions have done the entire FOSS community a disservice.

[higuita]

Yikes, if this is how it played out, and it certainly sounds plausible - even probable, this is one skeezy dude. His unethical actions have done the entire FOSS community a disservice.

Or maybe the investor didn't understand open source to begin with and tried to push things that would not be accepted and would result in a fork... things like ads, tracking and removal of features.

This kind of things are easy to do on closed source software, you have no choice... but on open source ones, you can fork it, bypassing this kind of restrictions. Probably the investor, seeing the big market share, tough that it would be easy to make money, but didn't understand that the software was free of charge and only support and mobile apps were paid... with so many potential customers it was not generating enough money for the investor likes.

Not knowing the story, it is a bit too far to point fingers to the owncloud founder... probably all this was both side fault, one too eager to make money, other too eager to not showing from the start how things really worked

[higuita]

found this: http://blog.jospoortvliet.com/2016/0...e-will-do.html

reading between the lines of "what we will do now" we can read the "what they didn't allow us to do" and "what they were forcing us to do"

[Delgarde]

A company must be "solvent" in order to continue trading, that is it can (or at least expects) to be able to pay all of its due debts and invoices on the date they are due. If the company cannot do that, they are considered insolvent and must cease trading and wind-up the company. This includes not only loans, but general company expenditure for example on office space, employee wages, taxation, etc. These dues are often paid by either (a) cash on hand, (b) revenue from sales or (c) a line of credit [one form of investment]

Agreed. The problem is unlikely to be the line of credit, as such - it's simply that if their funding has been cut off and they can't afford to pay the bills, they're unable to continue operating.

[DDF420]

it's simply that if their funding has been cut off and they can't afford to pay the bills, they're unable to continue operating.

They didn't borrow money from the bank,they sold shares to raise capital and meet growth..A quick google shows the investors(Converge Venture Partners,F-Prime Capital Partners,General Catalyst Partners) are far from short of money.So why was it cut off? More equity investment could mean balance of power changes? Sounds like the "lessons learnt" are from the way the company was structured to begin with which is the founders fault anyway.