16 april 2019 0 comments reading time: 5 minutes

Mundo Media — details and causes of bankruptcy

At its peak, Mundo Media had more than 100 employees in its offices worldwide. At the same time, the company also owed approximately $25.7 million to the Royal Bank of Canada. Huge volumes of bot traffic and the loss of major advertisers are cited as the underlying causes of the ensuing difficulties.

Mundo Media tried to avert the crisis by reducing the staff to 45 employees and cutting its expenses. Negotiations on a full or partial acquisition were launched in January 2019. Some companies expressed an interest in purchasing the assets. None of them, however, have got around to that. To continue its operations, Mundo Media had to pay out $900, 000. However, that didn’t happen, and the bank jointly with Mundo Media and the FTI consulting company initiated the receivership process, appointing Ernst&Young as Receiver of Mundo.

On April 9, the Ontario Superior Court of Justice issued an order pursuant to which Mundo Media, being unable to settle up its bank debts, shall be placed in receivership of audit firm Ernst&Young.

This implies that Mundo Media has actually gone bankrupt. Ernst&Young can now manage the company’s assets, resources, and intellectual property at its own discretion. However, the main purpose of the procedure is to pay out the bank debts, and so it is highly likely that all the assets will be sold out. The question of what assets the network actually has remained open. Only time will tell whether affiliates will get their money back or not, but one probably shouldn’t put much hope on that.

For the industry in general, it means that:

  • Even such major companies as Mundo Media are not immune to financial difficulties. Always diversify your traffic;
  • It is important to keep up with market trends. And be ready to transfer all your activities to new verticals;
  • Fraud can cause a company to collapse, no matter how large and successful it is. Do not engage in fraudulent activities!

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