Brenner Spiller & Archer

61,000 Customers Left Empty Handed After Drone Startup Files for Bankruptcy

Nearly a year ago, Lily Robotics was flying high as its camera drone flew off of virtual shelves. Not only had the company closed a $15 million investment deal, pre-sales of its camera drone had topped $34 million.

Today, however, Lily’s good fortune has been grounded. Without ever delivering a single drone, Lily has now filed for bankruptcy. And with Lily’s bankruptcy, over 61,000 preorders have been left unfulfilled.

Buzz Builds for Drone

Lily advertised the merger of sensing technology with a quadcopter to create an airborne photography drone. Once in-flight, Lily’s drone was meant to act as a flying camera, automatically following its user and taking aerial shots.

Without having sold an actual drone, Forbes said that the self-flying drone startup had positioned itself as a competitor to action camera maker GoPro. With all this buzz, Lily amassed more than $38 million in pre-orders from over 61,000 customers in more than 80 countries.

Buzzkill: Bankruptcy for Drone Maker

Fast-forward to today, and you’ll find Lily filing for Chapter 11 bankruptcy protection. Lily filed for bankruptcy after failing to find enough financing to go into production.

And a day after Lily’s bankruptcy, the drone maker was sued for misleading business practices; specifically, for using fake promo videos. Allegedly, footage attributed to Lily’s drone was actually shot with a GoPro camera.

Pre-Order Customers Out-of-Pocket After Bankruptcy

In Lily’s final blog post, the company’s founders promised a refund to its 61,000 preorder customers. The refund was offered over a 60-day period, with refunds going to the payment card used in the original transaction.

It sounds simple, but because of Lily’s bankruptcy, drone buyers won’t be able to claim their cash so easy. Lily has since issued the following notice: “We will try to refund all of our customers’ pre-order payments during the bankruptcy. However, we need Bankruptcy Court approval of a refund process to make those payments. To begin the process, the Company filed a motion on March 13, 2017, asking the Bankruptcy Court to approve the refund process.”

Do you have questions about filing for bankruptcy? Contact our bankruptcy lawyers today!