Last Friday, former custom PC maker Artesian Builds filed for Chapter 11 bankruptcy in California with more than $3 million in liabilities on its balance sheet, including $1.37 million in unfulfilled orders. Its court-appointed restructuring agent is now seeking buyers for the company’s assets, which include inventory worth an estimated $917,595.
Artesian Builds collapsed dramatically in March of this year, suddenly closing operations on March 8 and laying off about 50 employees in California and North Carolina. Artesian’s insolvency was apparently triggered by a wave of refunds following a controversial raffle broadcast live by company CEO and owner Noah Katz, but two former employees who spoke to PC Gamer undercover on anonymity said it was Katz’s long-term mismanagement that put the company in such a precarious position to begin with.
Another former employee had a more positive view of Katz and hoped the company would survive, but said Katz was inexperienced as a CEO and admitted it himself. The three former employees said Katz had already sought out new investors ahead of the controversial livestream.
According to Artesian’s financial documents included in the bankruptcy filing, the company’s debt includes more than $450,000 owed to two PC component distributors, more than $200,000 in credit card debt, a loan family of $1,200,000, accrued vacation pay for former employees (they got their last paychecks), and $1.37 million in deferred revenue from unfulfilled orders.
In the now-simplified Artesian Builds Discord server, a few customers have reported success in getting their money back by requesting chargebacks from their credit card companies, but the number of pending orders can be in the thousands. Two customers who contacted PC Gamer said their orders had already been delayed for several months when the business closed. A customer, whose son ordered a $5,000 PC in December last year, was told last February that orders for October were still being prepared.
Supply issues have genuinely been a problem for PC builders over the past few years, especially when it comes to GPUs. According to two of the former Artesian workers PC Gamer spoke to, however, another issue was that Katz was selling cryptocurrency mining systems, which further delayed gaming PC orders. Artesian was originally a mining rig vendor, but shifted to gaming PCs in 2019, according to Reverse. Apparently it didn’t fully rotate. A 2021 profit and loss statement provided in the bankruptcy filing includes $395,000 of “mining revenue.”
Bankruptcy notices are being issued and a meeting of creditors is scheduled for May 16.
A Chapter 11 bankruptcy filing allows a business to continue operating while paying its debts according to a plan negotiated with creditors. Artesian, however, has been closed since early March, and Artesian’s business restructuring director told PC Gamer that the company’s assets, including trade names, will be sold.