Silicon Valley has been awash with rumors of Red Herring's financial difficulty, but there's not been any proof — till now. Valleywag has obtained a copy of a lawsuit against the magazine, a Silicon Valley institution, by one of its lenders. Comerica Bank is calling in its loan to Alex Vieux's events and publishing group. In the complaint, published after the jump, the Michigan bank, which says Red Herring has failed to make repayments since last September, demands immediate payment of $180,457 plus penalty interest.
Red Herring, one of the most powerful Valley media organizations during the 1990s boom, was bought out of bankruptcy in 2003 by Vieux, a Franco-Haitian event organizer and globetrotting schmoozer who liked to demonstrate his telephone hotline to Mike Moritz of Sequoia. The magazine has never regained its former glory, or boomtime profitability. Several former employees report the company habitually missed payroll, and it has been sued repeatedly for failing to pay bills.
But, at the end of last year, the shaky company was rescued, at least temporarily, with a $1m bailout, Valleywag reported — and, from January, had enough cash at hand to satisfy at least that part of its loan covenant. Which raises the interesting question: why didn't Red Herring's exotic publisher at least take $100,000 or so from the bailout money to get up to date with the loan payments? The only possible answer: he has so many other liabilities to juggle, and creditors at the door, that default on the Comerica loan seemed the lesser evil.
Red Herring might still survive. But, having set up Red Herring magazine, and himself, as an authority on business, it's then untenable for Alex Vieux to run his own so sloppily.