Bankruptcy Declared By Daily Fantasy Sports Operator Fantasy Aces

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Fantasy Aces bankruptcy

One of the biggest daily fantasy sports operators this side of DraftKings and FanDuel has filed for bankruptcy.

According to the filing — first reported by Fantasy Alarm — Fantasy Aces apparently used player funds for operations.

As a result of Aces filing for Chapter 7 bankruptcy, it appears unlikely that players with money in their accounts will receive much, if anything, as a result. Players at Aces had not been able to access their accounts for more than a week.

A visit to Fantasy Aces’ website still only tells users that an “update is coming shortly.”

What we know about Fantasy Aces’ bankruptcy

Fantasy Aces — a publicly traded company on the TSX Venture Exchange — filed for bankruptcy in the Central District of California.

You can see the filing Aces. (Legal Sports Report is publishing only the first 12 pages of a 90-page filing. Much of the rest of the filing includes names and addresses of Fantasy Aces principals and creditors owed, and is available via PACER.)

Chapter 7 is a version of bankruptcy in which a company’s assets are liquidated.

What we can glean from the filing:

How and why this player accounts are nearly empty is unknown.

Bankruptcy for DFS site comes after deal falls through

Fantasy Aces had announced that it was being acquired by another operator — FantasyDraft — last week.

However, FantasyDraft backed out of that arrangement before the deal closed, citing “issues identified during our due diligence.”

Those issues are now pretty clear in retrospect. Previously, Aces had issued a corporate update about the sale, and a stop on trading of its shares had been put in place by regulators.

Fantasy Aces email

The following email was sent to Fantasy Aces users on Wednesday:
The FantasyAces team truly regrets to announce that we are unable to sustain our site and business operations effective January 31st 2017, filing for protection under Chapter 7 bankruptcy law.  After spending over a year attempting to secure long term capital, including recent negotiations with two notable companies which subsequently failed to close, we are left with an unresolvable financial burden and have spent every waking minute attempting to find a solution for our players most importantly. We have unfortunately exhausted every possible financial option with no success. We fought as hard as we could, in the end without a major infusion or acquisition we just were not able to make it. Our site is temporarily shuttered and all accounts are on hold during this time while we work with the bankruptcy court in finding the fastest possible solution for our players. 
Fantasy Aces LP has retained bankruptcy counsel who may be contacted at:
Red Hill Law Group
38 Corporate Park
 Irvine CA 92606
[email protected] 

What do Fantasy Aces players do for recourse?

Fantasy Aces is under the regulatory schemes that are coming online in several states. As such, players in those states should contact those regulators to see what recourse, if any, might be available:

The latest DFS site to go insolvent

This is not the first case of a DFS operator apparently dipping into player funds for operational purposes.

In 2016, other operators acquired at least two other sites in bailouts: