November 5, 2012
By: John Clark
Cash4Gold, a company best known for its commercial featuring MC Hammer during the 2009 Super Bowl, is filing for bankruptcy help, according to a report this week from Fortune magazine.
The company, which is a metal refinery, though you probably wouldn’t know it from its commercials, will likely be sold for about $440,000 to Direct Holdings America, a conglomerate that also owns Time-Life.
Sources note that the sale still needs to be approved by the bankruptcy court, but that the deal is likely to go through without any complaints from creditors. This bankruptcy filing is particularly noteworthy because Cash4Gold, which is presently owned by Green Bullion Financial Services, was a booming company as recently as three years ago.
Florida-based Green Bullion recently gathered $40 million in financing from several venerable venture capital firms that had a lot of faith in the company’s business plan.
This cash infusion led to a period of lavish spending by Cash4Gold, including a $2.4 million commercial during the Super Bowl that featured a rapping MC Hammer.
The venture capital firms, however, refused to offer more financing when Cash4Gold began experiencing financial problems. One of the company’s business partners launched a lawsuit against one of the backers alleging a breach of contract, but this claim was eventually settled out of court.
Cash4Gold reportedly shut down its refining operations and closed its corporate headquarters. Now, the company will soon be in the hands of Direct Holdings America, which is described as a "direct marketer of music and video projects."
What this company plans to do with a metal refinery is anyone’s guess. Another company that had an interest in buying Cash4Gold was the Massachusetts-based metal refinery, CashForGoldUSA. While this would have been a more natural transition, the company apparently lost the bidding war to Direct Holdings America.
Sources note that Cash4Gold’s biggest creditor was a marketing agency that helped produce the infamous Super Bowl commercial. The company reportedly owes the agency more than $800,000.