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.
