How Halsey Minor Blew Tech Fortune on Way to Bankruptcy
How do you sell the technology company you founded for $1.8 billion and five years later file for personal bankruptcy? For Halsey Minor, it may have been a fascination with houses, hotels, horses and art.
Minor, 47, who sold CNET Networks Inc. to CBS Corp. (CBS) in 2008, says he owes as much as $100 million and only has, at most, $50 million to pay his debts thanks to bad bets on real estate and other ventures that took him out of what he calls his technology comfort zone.
He’s made sure that he won’t be the only one who’s uncomfortable. There’s no money for his unsecured creditors, he said in his bankruptcy petition, which seeks to hand over all his eligible assets to a court official who will sell them to the highest bidder and wipe Minor’s finances clean for whatever he decides to do next.
“Choosing Chapter 7 is clearing the slate,” said Bob Rattet, a bankruptcy lawyer in White Plains, New York. “He isn’t required like Middle America to pay his debts, because they’re mostly business-related.”
The bankruptcy petition, filed May 24 in U.S. Bankruptcy Court in Los Angeles, listed assets of as much as $50 million and debt of as much as $100 million. In Chapter 7, an impartial trustee is appointed to administer the case and sell assets such as automobiles.
Chapter 7 is designed to give an individual a “relatively fast” fresh start and usually doesn’t give creditors “any significant dividends,” said Harvey Miller, lead bankruptcy lawyer to defunct Lehman Brothers Holdings Inc.
By contrast, for a business or partnership, a Chapter 7 gives no discharge of debts, making it “a neat form of economic suicide,” according to bankruptcy attorney Michael Cook.
Halsey Minor’s Minor Ventures invested in early-stage technology startups including GrandCentral Communications Inc., which Google Inc. (GOOG) bought in 2007 for about $65 million and renamed Google Voice.
Since then, Minor has been selling his art collection to pay debts. In 2010, he sold a painting of a blue-eyed nurse by Richard Prince and an aluminum couch by Marc Newson to help raise $21.1 million for his creditors. Proceeds from the sales went toward a $21.6 million judgment obtained in October 2009 by ML Private Finance, a Bank of America Corp. affiliate, on a delinquent loan.
In April 2010, Sotheby’s Inc. won a $6.6 million judgment against him in connection with three artworks he bought at auction and later refused to pay for.
Minor didn’t respond to an e-mail seeking comment on the Los Angeles filing. His lawyer, David Shemano of Peitzman Weg LLP in Los Angeles, didn’t respond to an e-mail. Minor netted $200 million from his sale of CNET, according to CNN Money.
“I love being an entrepreneur even though it involves financial risk,” Minor, a native of Charlottesville, Virginia, said in an e-mailed statement cited by his hometown’s Daily Progress newspaper. “But if you win some you are going to lose some too.”
“A case might have been made that I should never have strayed from technology,” Minor said in the e-mail, according to the Daily Progress. “However, I like doing things outside my comfort zone, and I believe that willingness in part accounts for my tech successes.”
After years of technology investing, Minor embraced real estate. In February 2008, Minor bought the Carter’s Grove Plantation from Virginia’s Colonial Williamsburg Foundation for $15.3 million. The 400-plus acre estate, with a mile of frontage on the James River, was at one time a museum. Its 12-bedroom Georgian mansion was built for Carter Burwell, a scion of one of the richest families in colonial Virginia, in the 1750s. Architect magazine said Minor planned to raise racehorses on the property.
Carter’s Grove filed for bankruptcy protection in San Francisco in 2011, according to Minor’s petition. The case later was transferred to the Eastern District of Virginia. Minor put Minor Family Hotels LLC into bankruptcy in 2010 and the case is pending in the Western District of Virginia, according to court papers.
Creditors listed in the Los Angeles filing include Sotheby’s, Colonial Williamsburg Foundation, Ship Art International and AVN Air LLC, as well as several law firms.
Minor also listed Claiborne Farm, Lanes End Stallions, KESMARC Kentucky and Braeburn Training Center among his creditors. Amounts owed to each creditor weren’t disclosed.
“No funds will be available for distribution to unsecured creditors,” according to the petition.
Minor had at least one brush with bankruptcy early on. It was the early 1990s, and he was trying to get CNET off the ground, Businessweek reported then. He had maxed out his credit cards, expenses were piling up “and he was $40,000 in the hole,” according to the magazine.
Minor had a falling out with fellow backers of 12 Entrepreneuring Inc., a business incubator he started in 2000 with Internet veteran Eric Greenberg, amid allegations of lavish spending as startup investing began falling out of favor.
The incubator had raised more than $130 million from investors including Goldman Sachs Group Inc., Morgan Stanley, angel investor Ron Conway and venture firm Benchmark Capital, which had made a fortune from an early investment in EBay Inc. Directors included Marc Andreessen, the co-founder of Netscape Communications Corp., and EBay founder Pierre Omidyar.
“This was the dream team,” Conway told Businessweek in a November 2001 article. Conway led a revolt to recoup the investor group’s money, raising questions over $45 million in office-lease commitments and $13 million on furnishings and technology equipment, Businessweek reported. Minor eventually returned 40 percent of the capital, Fortune reported in 2008.
Conway declined to comment.
The number in 12 Entrepreneuring referred to the amount of wealth -- $1 trillion, or 1 and 12 zeroes -- the firm planned to create, according to Chris Bruno, a former salesman at Scient Inc., which Greenberg started in 1997 and took public two years later. While a company executive denied the reference in a Wall Street Journal story at the time, Bruno said it was common knowledge around the Scient office, where Greenberg was “immensely” admired.
“That was going to be his next big thing and we all wanted to follow him,” said Bruno, now a vice president at Packet Fusion Inc., a San Francisco Bay area telecommunications company. “We would have been happy with fewer than 12 zeroes.”
12 Entrepreneuring invested in at least three companies -- Propel Software Corp., iBuilding Inc. and NotifyMe Networks -- before closing in 2001. That year, Fortune ranked Minor as the 34th wealthiest American under the age of 40, with a net worth of $180.2 million.
Minor was also an early investor in Salesforce.com Inc., a pioneer in online-business software founded in 1999. He also served on Salesforce’s board. In 2003, Salesforce.com CEO Marc Benioff joined the board of GrandCentral Communications Inc., an Internet company Minor founded after CNET.
Benioff didn’t immediately have a comment. Shelby Bonnie, who co-founded CNET with Minor, declined to comment.
Minor is a graduate of the University of Virginia with a degree in anthropology. He grew up in Charlottesville and attended Woodberry Forest School, a private, all-male boarding school in Woodberry Forest, Virginia.
The home listed on Minor’s filing is in the 90210 zip code made famous by the television series. It’s a two-story white brick house in the “flats” of Beverly Hills, in a neighborhood of single-family homes just off of Wilshire Boulevard, near the Beverly Hilton hotel. While these aren’t the larger, more ostentatious homes in the “hills” of Beverly Hills, they can still fetch high valuations. One residence nearby sold for $3.2 million in November.
A woman came to the door of the house, but didn’t open it to a reporter. There were three SUVs in the driveway -- a black Mercedes Benz, a black Range Rover and a black GMC Yukon -- and a bicycle. Gardeners were mowing the lawn.
The woman shook her head “no” when asked if Minor was home and then walked away from the door.
The case is In re Halsey McLean Minor, 13-bk-23787, U.S. Bankruptcy Court, Central District of California (Los Angeles).
To contact the reporter on this story: Dawn McCarty in Wilmington at firstname.lastname@example.org