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AI software company iLearningEngines has filed for Chapter 11 bankruptcy protection in Delaware, citing between $100 million and $500 million in both assets and liabilities. The Bethesda, Maryland-based company’s financial struggles were exacerbated by a recent cyberattack, a proposed securities class action lawsuit, and allegations of fraudulent revenue reporting.

In its bankruptcy petition filed Friday, iLearningEngines reported that its Chapter 11 case could result in a default on approximately $54 million in debt owed to East West Bank and Valley National Bank. The company has faced significant scrutiny since August when Hindenburg Research, a prominent short-seller, alleged in a report that iLearningEngines overstated its Indian revenue by 99%.

Hindenburg’s claims triggered shareholder Danny Walker to file a proposed class action in October, accusing the company of misleading investors. According to Walker, iLearningEngines reported $138 million in revenue from India in 2022 but actually generated only $850,000. The lawsuit alleges the company collaborated with an undisclosed technology partner to fabricate revenue and expenses.

Compounding the financial strain, iLearningEngines disclosed in a recent securities filing that a cyberattack compromised sensitive files, redirected a $250,000 wire payment that could not be recovered, and deleted emails from its network. The incident further destabilized the company's already fragile position.

At a December 20 board meeting, interim CEO Thomas Olivier briefed directors on a potential financing offer received the day before from an unaffiliated entity. Following this update, the board voted to proceed with the Chapter 11 filing.

“We appreciate the continued support of our customers, partners, and employees,” Olivier said in a statement. “Our hope is that this process will allow us to emerge as a stronger, more robust business capable of serving our stakeholders over the long term.”

The case, assigned to U.S. Bankruptcy Judge Laurie Selber Silverstein, marks a significant chapter for the embattled company. Counsel for iLearningEngines, Ian J. Bambrick of Faegre Drinker Biddle & Reath LLP, declined to comment on Monday.

The bankruptcy filing, titled In re: iLearningEngines Holdings Inc., is being heard in the U.S. Bankruptcy Court for the District of Delaware under case number 1:24-bk-12827.