The crash of Bitwise Industries is sending ripples across US cities
FRESNO, Calif. – The unraveling of Fresno-based tech company Bitwise Industries after announcing it furloughed all of its staff has sent shockwaves throughout the San Joaquin Valley and beyond.
The furloughs came as a matter of “acute financial distress,” with details about the company’s finances slowly emerging.
The tech-company employs more than 900 employees, with roughly 400 based in Fresno, Merced and Bakersfield. Bitwise has also expanded to states like Texas, Illinois, Ohio and New York.
Before Bitwise became what it is today, its co-founders Irma Olguin Jr. and Jake Soberal started with a small tech effort called “Geekwise Academy.” In the following years, Bitwise expanded and even introduced a “Digital New Deal” aimed at transforming who has access to technology.
Today the company is known for opening workspaces and training workers in technology.
But as more is left to learn about what went wrong, uncertainty has set in for hundreds. Elected officials have expressed interest in helping furloughed workers get back on their feet.
Legal actions taking shape
Government officials are also beginning to take a close look at the financial and legal situation.
Fresno Mayor Jerry Dyer revealed in a letter to Bitwise leaders the tech company has not paid business taxes or provided financial reports in more than a year.
Dyer said the city was not given advance notice of the mass furloughs that took place earlier this week – which is required by state law. He added the situation has caused “considerable anxiety” that has rippled across the community.
The city is demanding Bitwise comply with state law and turn over necessary financial documents.
And already, a Texas-based company has filed a lawsuit against the company after an alleged breach of contract. According to court documents, NICbyte LLC claims to have contributed nearly $35 million to Bitwise ventures, including purchasing five of its buildings.
A major allegation in the lawsuit is that Bitwise illegally borrowed nearly $30 million in loans while using the buildings as collateral.
The lawsuit asks for the properties to be taken off the market, among other things.
Shock in different communities
Across the communities where Bitwise had expanded, the abrupt news of furloughs hit at once and revealed several projects the company was in the middle of producing.
News outlets in El Paso, Toledo and Buffalo reported Bitwise was in the middle of technology expansions and hiring more workers. But like in the Valley, all of that came to a screeching halt.
The El Paso Times reports nine employees were based in that city, with plans to increase employment to about 100 between El Paso and Las Cruces, New Mexico.
WTOL in Toledo, Ohio reports the city was also caught off guard by the Bitwise crash. A city official was quoted saying the company had planned to bring nearly 400 new jobs to the city.
And in Buffalo, New York, Bitwise jobs were expected to alleviate a worker shortage and provide good-paying jobs to those from underserved communities. The Buffalo News reports more than 60 local workers had gone through Bitwise training. Plans for 70 more trainees were canceled.
At each of the locations, news reports show there were building renovation plans that are now halted.
‘I feel bad’
Earlier this year, Bitwise leaders announced an $80 million investment that was expected to help the company’s new expansion to Chicago. At the time, the company had said thousands of jobs had been created through their work.
In addition, company leaders said over one million square feet of previously vacant spaces in underserved downtowns across the country had been turned into technology work spaces.
Nikki Avila has been a tenant at Bitwise Bakersfield, one of the Valley facilities, for two years. As a birth doula, she says she relies on the building’s nighttime hours to conduct her business.
The news of immediate and company-wide furloughs of Bitwise employees shocked her when she arrived at the facility this week.
“I feel bad for the receptionists and the cleaners here. I’m not going to see their faces, and that’s really sad,” Avila said.
She says the situation with Bitwise has even left her own business future feeling uncertain, adding, “What does this look like now? Do I have to move, am I still able to stay here, are the tenants safe?”
With litigation and many questions piling up against the company, communication from management has been scarce.
The future of Bitwise in the Valley and other states remains unclear. But for now, many are scrambling to stay afloat as their livelihood suddenly has disappeared.