KIT digital, a major global implementer of online video systems for broadcasters and platform providers, is planning a radical restructure under bankruptcy proceedings, to re-emerge as a new group called Piksel. It follows a turbulent time for the company, which grew rapidly through acquisition but then tumbled in value.

KIT digital Inc claims 2,500 clients in over 50 countries, among them major media brands like BSkyB, Disney ABC, Telefonica and Verizon. The company, originally based in Prague, expanded rapidly in recent years through a number of acquisitions. These included ioko, a former informitv client, which it bought for nearly $80 million, including $63 million in cash, in April 2011. This followed the acquisition of Polymedia for $34 million, and a clutch of other companies, including KickApps, for around $77 million. At the time, Kit digital shares were trading at over $12, rising to a high of $16.

The chief executive, Kaleil Isaza Tuzman, resigned in April 2012, citing disagreements with the board. The share price progressively declined as investors lost confidence in the company. Its value further plummeted after an announcement on 21 November 2012 that it would have to restate its finances for the previous three years because of “errors and irregularities” relating to software licensing agreements.

The former chief executive responded by issuing a statement making various allegations of lack of focus from the new management team.

Trading in shares was then suspected and class action suits were filed against the company on behalf of investors.

Some subsidiaries were subsequently sold while others were placed in administration and over a fifth of the staff globally lost their jobs.

KIT digital was delisted from the NASDAQ stock market on 21 December 2012, at which point its shares were virtually worthless.

The company now expects to file for chapter 11 bankruptcy protection. Three of the five largest shareholders, all venture capital funds, will buy the core assets, including profitable operating subsidiaries ioko 365, Polymedia, Kewego, Multicast and Megahertz, and invest in a new company that will be called Piksel. It says it expects to be in a position to pay all existing creditors.

“We are pleased to announce this comprehensive solution that will provide KIT with relief from the financial, legal, and regulatory issues currently encumbering it,” said William Russell, the non-executive chairman of the board.

“The plan provides certainty and comfort to our customers and employees and it will allow the reorganized company to aggressively pursue growth opportunities with confidence,” said Peter Heiland, the interim chief executive. “By moving the core businesses forward together unburdened by the issues currently plaguing the corporate parent, our customers and products can once again become the sole focus of this exciting business.”

The holding company originally known as ROO Group, was hardly helped by its new name, KIT, which implied a grab bag of parts rather than a complete product or service offering. The new name, Piksel, hardly inspires investor confidence in the circumstances.

There is hope that the restructuring plan will enable a turnaround for the remaining core companies that were expensively acquired. There is significant scope to grow the remaining businesses, either collectively or separately, providing they can move forward and shed the damaging associations.