Marin Software: 66-Day Chapter 11 Restructuring

On July 1, 2025, Marin Software Incorporated filed for chapter 11 bankruptcy protection in the United States Bankruptcy Court for the District of Delaware, following years of declining revenue and operational losses. The San Francisco-based digital marketing software company entered bankruptcy through a pre-negotiated agreement with Kaxxa Holdings, Inc., an affiliate of private equity firm ESW Capital. The company emerged from bankruptcy 66 days later on September 5, 2025.

Corporate History and IPO

Marin Software was founded in 2006 by Christopher Lien, Wister Walcott, and Joseph Chang in San Francisco, California. The company developed a software-as-a-service (SaaS) advertising management platform designed to help performance-driven advertisers and agencies manage digital advertising spend across search, social, and eCommerce channels.

Prior to going public, Marin secured $79.5 million across six venture rounds from prominent investors. Benchmark Capital led the Series A round, raising $7.25 million in 2007, while DAG Ventures led a $16 million Series C in 2008. Additional investors included Focus Ventures and Triangle Peak Partners.

The company's IPO on March 22, 2013 was a milestone for the advertising technology sector. Marin priced its offering at $14 per share, raising $105 million at a $425 million valuation. The company initially planned to offer 7 million shares at $11-$13 but expanded the offering to 7.5 million shares due to strong institutional demand. On its first trading day, the stock rose approximately 40% before settling around $18, representing a 20-28% gain above the IPO price. At its peak, Marin Software achieved a market capitalization exceeding $500 million.

Financial Distress and Decline

Marin Software's bankruptcy filing followed a period of declining revenue and losses that began in 2016. According to the First Day Declaration filed by CFO Robert Bertz, the company experienced year-over-year revenue decline for nearly a decade. From 2016 onward, the company posted consistent annual losses and declining revenues, a trend that management could not reverse despite multiple restructuring initiatives.

The company incurred a net loss of $8.6 million during fiscal year 2024, continuing the pattern of annual losses. Revenue for fiscal 2024 totaled $16.7 million, with cost of sales of $6.8 million and operating expenses of $18.5 million. As of December 31, 2024, the company had cash and cash equivalents of $4.4 million, which declined to about $100,000 by the petition date.

At the time of filing, Marin's prepetition debt structure consisted of $300,000 in secured debt owed to 5Y, LLC and approximately $350,000 in unsecured obligations, a debt load that nonetheless exceeded the company's cash position.

By late 2024, Marin's market capitalization had fallen below $10 million, with shares trading under $1, compared with a peak market cap exceeding $500 million earlier in the company’s history. Despite the decline, revenue was only decreasing at approximately 4% per year, with much of the company's remaining revenue derived from revenue sharing agreements with Google that generated $6 million or more annually even at the end.

The company's decline coincided with shifts in the digital advertising landscape. Industry analysts noted that while Marin's platform offered cross-channel optimization capabilities, the value proposition diminished as native platform tools improved. Free and low-cost tools from publishers like Google and Facebook became "good enough" for many marketers, reducing demand for third-party advertising management solutions. Major platforms developed their own native tools, limiting the addressable market for independent software providers.

By November 2023, Marin Software disclosed substantial doubt about its ability to continue as a going concern, triggering the board of directors to engage Evercore Inc. as investment banker to explore strategic alternatives. The company had reviews from enterprise clients for its cross-channel campaign management capabilities, but the financial position continued to weaken.

Workforce Reductions and Operational Restructuring

The company implemented workforce reductions in the months preceding bankruptcy, cutting headcount by approximately 90% over a nine-month period. In October 2024, Marin commenced a restructuring and reduction-in-force plan, eliminating approximately 27 employees representing 26% of total headcount as of September 30, 2024. The company estimated pre-tax annualized cost savings of approximately $3.5 million to $3.7 million from this initial restructuring, with severance expenditures estimated between $0.6 million and $0.8 million.

Marin implemented two additional reductions in 2025:

• March 4, 2025: Approximately 22 employees terminated, representing 28% of the December 31, 2024 workforce
• April 9, 2025: Approximately 20 employees terminated, representing 30% of the March 31, 2025 workforce

Even after shrinking to 100, then 75, and finally 40 employees, the company could not achieve profitability. By the petition date, Marin had reduced its workforce to just 8 employees and 3 independent contractors, with an additional 9 employees at foreign subsidiaries that were not part of the bankruptcy filing. The company operated with a fully remote workforce, maintaining only a small shared office in San Francisco and a co-location data center in Las Vegas on month-to-month leases.

Failed Sale Process and Path to Dissolution

Prior to the bankruptcy filing, Marin Software conducted a sale process through investment banker Evercore Inc., which had been engaged since 2018. The most recent sale process contacted 39 or more potential acquirers, with management presentations made to 17 interested parties. In fall 2024, two non-binding indications of interest emerged, leading to exclusive negotiations with the highest bidder beginning in November 2024.

However, negotiations with the first potential buyer terminated in January 2025. A second potential buyer provided an indication of interest on February 1, 2025, but those negotiations also terminated in early April 2025 without a definitive agreement.

With sale efforts exhausted, Marin Software's Board of Directors approved a Plan of Dissolution and Liquidation on April 10, 2025, subject to stockholder approval. The board determined that an orderly wind-down of operations was in the best interest of stockholders following a thorough review of strategic alternatives.

In connection with the dissolution process, the company issued one share of Series A Preferred Stock to CEO Christopher Lien for $1.00 on April 25, 2025. The Plan of Dissolution, subsequently approved by stockholders on June 11, 2025, contemplated paying general unsecured claims in full but would have left insufficient funds for any distribution to the company's 3,188,518 shares of common stock outstanding. This liquidation scenario changed when Kaxxa Holdings emerged as a strategic buyer in late May 2025, offering a transaction that would provide distributions to both creditors and shareholders.

Pre-Negotiated Chapter 11 Structure

The Marin Software bankruptcy filing represents a pre-negotiated Chapter 11 case designed for expedited confirmation and emergence. The company voluntarily initiated the pre-negotiated case with Kaxxa Holdings providing $5.5 million in funding upon restructuring completion.

On May 30, 2025, Marin signed a non-binding letter of intent with Kaxxa Holdings, Inc. To bridge operations during negotiations, 5Y, LLC (an affiliate of Kaxxa) provided a $300,000 secured promissory note on June 6, 2025. The Restructuring Support Agreement was signed on the petition date, establishing the framework for the expedited Chapter 11 case.

Marin secured $1.2 million in debtor-in-possession financing from 5Y, LLC to fund operations during the Chapter 11 case, as detailed in the DIP Financing Motion. The DIP facility carried a 10% annual interest rate on a payment-in-kind quarterly basis, increasing to 13% upon an Event of Default. An interim draw of $500,000 was available immediately. The facility was secured by first-priority senior security interests on substantially all pre and post-petition assets, with superpriority administrative expense status. Maturity was set for September 30, 2025 or the earlier effective date of the reorganization plan.

The DIP financing arrangement included a $250,000 cap on lender and plan sponsor legal fees.

On June 17, 2025, Marin Software received notice from Nasdaq's Listing Qualifications Department regarding non-compliance with Nasdaq Listing Rule 5250(c)(1). The company was delinquent in filing its Annual Report on Form 10-K for fiscal year 2024 and its Quarterly Report on Form 10-Q for Q1 2025. Marin's common stock was delisted from The Nasdaq Capital Market, with trading suspended on June 26, 2025—just five days before the bankruptcy filing.

Plan of Reorganization and Creditor Treatment

Upon emergence, Kaxxa Holdings provided $5.5 million in Plan Consideration, enabling full payment to all creditors and a distribution to equity holders. The prepetition lender, 5Y, LLC, waived its $300,000 secured claim for the benefit of other stakeholders.

All classes were deemed unimpaired under the plan, eliminating the need for creditor voting. No official committee of unsecured creditors was appointed in this case. The DIP Lender exercised its subscription option to convert 100% of its $1.2 million DIP Facility Claim into reorganized equity, receiving 600 shares of the reorganized company (with each 10% of the claim converting to 60 shares).

Case Timeline and Procedural Milestones

The 66-day case proceeded through an accelerated schedule:

Confirmation and Emergence

The Bankruptcy Court held a combined hearing on the disclosure statement and plan confirmation on August 28, 2025. The Court's Confirmation Order on August 29, 2025 found that the plan satisfied all requirements under Section 1129 of the Bankruptcy Code, including adequate disclosure, good faith proposal, and feasibility.

Marin Software emerged from chapter 11 bankruptcy on September 5, 2025, completing the restructuring in approximately 66 days from the petition date. Upon emergence:

• All existing shares of common stock, stock options, restricted stock units, and Series A Preferred Stock were cancelled and discharged
• New equity totaling 1,000 shares was issued: 600 shares to 5Y, LLC (60%) and 400 shares to Kaxxa Holdings, Inc. (40%)
• All existing directors and officers resigned as of the effective date
• Armanino Advisory LLC was appointed as Plan Administrator to manage distributions and wind-down activities

The case lasted 66 days and provided full recovery to creditors. The company plans to focus on AI-driven digital advertising solutions under its new ESW Capital ownership.

Professional Fees and Administrative Costs

The pre-negotiated structure resulted in total approved professional fees of $764,449.13. All professionals were retained: Pachulski Stang and Fenwick & West on July 29, 2025, and Armanino Advisory on August 15, 2025. Final fee applications were filed by October 6, 2025 and approved via omnibus order on October 27, 2025. Total approved professional fees amounted to $764,449.13, allocated among the following advisors:

Investment banker Evercore Inc. filed a proof of claim for $1,020,000 ($1 million success fee plus $20,000 in expenses) based on its engagement letter dated February 15, 2018. Following negotiations, the claim was settled on December 17, 2025 for $550,000 as a general unsecured claim.

ESW Capital and Private Equity Strategy

The acquisition by Kaxxa Holdings aligns with ESW Capital's established strategy of acquiring distressed software companies. Joe Liemandt founded Trilogy Software in 1989 and became the youngest self-made millionaire on Forbes' 1996 list. Through ESW Capital, Liemandt has built a portfolio of dozens of small software ventures, predominantly B2B companies, with his current net worth estimated at $3 billion.

ESW Capital's approach involves acquiring struggling enterprises and reshaping them into revenue-generating operations. Acquired companies typically receive new executive teams from Liemandt's internal staff, with operations shifting to international contractors through Crossover, which recruits global employees willing to work full-time as independent contractors.

For Marin Software, which already reduced its workforce by 90% before filing, the ESW Capital acquisition shifted the company from public to private ownership. Beyond the operating business, Kaxxa acquired assets including an intellectual property portfolio comprising five issued patents, one pending patent application, trademarks, copyrights, and domain names. The company's tax assets—approximately $159.8 million in federal net operating losses and $6.1 million in federal R&D credit carryforwards—are reflected in the plan documents. NOL protection procedures (referenced as one of the most-connected documents in the case docket) were entered on July 3, 2025 (interim) and July 29, 2025 (final) to preserve these attributes under Sections 382 and 383 of the Internal Revenue Code by limiting trading in the company's stock during the bankruptcy.

Industry Context

Marin Software's 19-year operating history reflects the evolution of the advertising technology sector. Companies providing services that complement major advertising platforms faced ongoing risks as those platforms expanded their native capabilities. SaaS customer retention kept customers for years, with revenue declining approximately 4% annually even as market conditions shifted.

Under ESW Capital ownership, Marin Software continues operations as a private company, retaining customer relationships and tax attributes—approximately $159.8 million in federal net operating losses and $6.1 million in federal R&D credit carryforwards. The company plans to focus on AI-driven digital advertising solutions under its new ownership structure, continuing to offer the cross-platform campaign management capabilities described in product reviews.

Frequently Asked Questions

Was Marin Software's chapter 11 bankruptcy prepackaged or pre-negotiated? Pre-negotiated. The company filed on July 1, 2025, with a Restructuring Support Agreement signed on the petition date with Kaxxa Holdings. Voting was conducted post-filing, but all classes were unimpaired, eliminating the need for creditor votes.

How long did the bankruptcy take? 66 days. The company filed on July 1, 2025, and emerged on September 5, 2025, following plan confirmation on August 29, 2025.

What happened to existing shareholders? All existing common stock, stock options, restricted stock units, and Series A Preferred Stock were cancelled. Shareholders received a $2.5-4 million distribution under the plan.

Who owns Marin Software now? The reorganized company is owned 60% by 5Y, LLC and 40% by Kaxxa Holdings, Inc.—both affiliates of ESW Capital. Joe Liemandt's ESW Capital specializes in acquiring distressed software companies.

What was the DIP financing structure? 5Y, LLC provided $1.2 million at 10% PIK interest. The DIP claim was converted to 600 shares (60%) of reorganized equity upon emergence.

Were creditors paid in full? Yes. All administrative, priority, secured, and general unsecured claims were paid 100%. The prepetition lender (5Y, LLC) waived its $300,000 secured claim for the benefit of other stakeholders.

How many employees remained at filing? Just 8 employees and 3 independent contractors in the U.S. The company had reduced its workforce by approximately 90% over the nine months before filing, from over 100 employees to 8.

Why did the sale process fail? Evercore contacted 39+ potential acquirers, with 17 receiving management presentations. Two indications of interest emerged in fall 2024, but both negotiations terminated without a definitive agreement.

What assets did Kaxxa acquire? Beyond the operating business, Kaxxa acquired five issued patents, one pending patent application, trademarks, copyrights, domain names, and substantial tax assets including $159.8 million in federal NOLs.

What caused Marin's financial distress? Free and low-cost tools from publishers like Google and Facebook became sufficient for many marketers, significantly reducing demand for third-party advertising management solutions. Revenue declined year-over-year from 2016 onward, with annual losses continuing throughout.

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For additional insights on technology sector restructurings and bankruptcy trends, visit ElevenFlo's bankruptcy analysis blog.