Last Friday, shuttered custom PC maker Artesian Builds filed for Chapter 11 bankruptcy in California with over $3 million in liabilities on its balance sheet, including an estimated $1.37 million in unfulfilled orders, according to documents included with the filing. Artesian's appointed restructuring officer is now seeking buyers for the company's assets, which include an estimated $917,595 worth of inventory. The owner estimates a total asset value of $1.27 million. It's currently unclear how accurate these estimates are.
Artesian Builds collapsed dramatically earlier this year, suddenly shutting down on March 8 and letting go of around 50 employees in California and North Carolina. Artesian's insolvency was apparently triggered by a wave of refunds following a controversial raffle livestreamed by the company's owner and CEO Noah Katz, but two ex-employees who spoke to PC Gamer under the condition of anonymity said it was Katz's long-term mismanagement that put the company in such a precarious position to begin with.
Another ex-employee had a more positive view of Katz and hoped the company would survive, but said that the CEO was inexperienced as an executive, and had said as much himself. All three ex-employees said that 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 components distributors and holds over $200,000 in credit card debt. There's also a $1.2 million secured family loan on the books, and it owes accrued paid time off to ex-employees (although former employees did get their final paychecks, according to those spoken to by PC Gamer). An estimated $1.37 million in deferred revenue from unfulfilled orders is shown in the latest balance sheet.
Some of the figures are difficult to interpret, and I've asked for clarification from the restructuring officer in charge of selling off Artesian's assets, but have not received a response at the time of writing. One ex-employee who examined the figures said that the inventory valuation looked very high to them based on what they knew about the company's operations. "Our books were a nightmare," they said.
In the now stripped-down Artesian Builds Discord server, a few customers have said they managed to get their money back by requesting chargebacks from their credit card companies. Thousands of others may be owed money, though. There are at least "hundreds" of gaming PC orders that were never shipped, said one ex-employee.
An Artesian Builds customer who contacted PC Gamer said that, when the company closed last month, they were still waiting on a $4,800 PC they paid for in November. Another customer, whose son ordered a $5,100 PC in December, was told in February that orders placed in October were still being built. They ended up filing a dispute with their credit card company and buying a PC from a different company.
Supply issues have genuinely been a problem for PC builders over the past few years, especially when it comes to GPUs. According to two ex-Artesian workers PC Gamer spoke to, however, another problem was that Katz was selling cryptocurrency mining systems, which further delayed gaming PC orders. Artesian was originally a mining rig supplier, but pivoted to gaming PCs in 2019, according to a report from Inverse (opens in new tab). Apparently, it didn't pivot completely. A 2021 profit and loss statement provided in the bankruptcy filing includes $395,000 in "Mining Business Revenue."
Bankruptcy notices are being delivered now, and a creditor meeting is scheduled for May 16.
Chapter 11 bankruptcy allows a company to continue operating while paying its debts according to a plan negotiated with creditors. Artesian has been shuttered since early March, though, and the chief restructuring officer handling the company's affairs indicated to PC Gamer that its assets, including trade names, will be sold.
This article was updated on April 28 to add an ex-employee's comments on aspects of the company's financial statements.