Burstnet Technologies Inc. aka Burstnet lies, rips off landlord, refused to move out of Dunmore Data

[drmike]

BREAKING NEWS

Burstnet ripped off their landlord (Insite Dunmore) and failed to pay lease obligations going all the way back to July 2013.

see for yourself: http://vpsboard.com/files/bustnet_2014_stiffed_their_landlord.pdf

Background:

As mentioned in Burstnet Technologies (aka Burstnet) has ran quick and fast from their Dunmore datacenter.

Their new escape hatch plan is to relocate customers to DC74 in North Carolina, while abandoning the Pennsylvania datacenter.   

This is while spinning the situation as being "out of their control" and "sudden".  Premise is something just happened necessitating a move.  Yet, nothing could be further from the truth.

Burst left Pennsylvania while intentionally not paying for multiple lines of credit for computer server hardware and one lease line was for 480V power equipment presumed to be used in Dunmore build out.

Current Dunmore Datacenter Eviction Action

In a December 24, 2013, Lackawanna County, Pennsylvania, Civil Court filing, it details Burst's original lease for the Dunmore industrial space:

"... Agreement for 156,283  rentable square feet"

Burst did not lease the total space but according to the Lease documents:

"Approximately 32,578 leasable square feet.... 16,246 square feet on August 1, 2012...  and.... remaining 16,332 square feet on October 1, 2012."

Terms of the lease:

ONE HUNDRED TWENTY MONTHS

Price:

$10/sq foot.

Annual Base Rent: 

$325,780

Monthly Base Rent:

$27,148.33

I've included the UCC filings on record in Pennsylvania for Burst and recent  LEAF Commercial Capital dealings as of February.

 

[drmike]

Welcome to everyone reading along at home...

More commentary and analysis to follow...

---------------------------------------------------------------

2/26/2013 was an electric bill of $2370.10 for 1-4 to 2-4-2013.

At an industrial discount rate of 5 cents a KwH this is 47402 KwH (based on 110V power).

A 1A steady drawing server at 110V will draw 110 watts x 720 hours = 79.2KwH in a month.

47402 / 79.2 = 598.5 1A draw servers.

Obviously, you have switches, routers, NOC gear, batteries, PDUs and other losses.


So how many servers really did Burst have in Dunmore ? 

Answer: not many.

 

[MannDude]

Maybe if VolumeDrive had paid their bills, then BurstNET could have paid theirs?

 

[drmike]

#GTFO 

 

 

[drmike]

#GTFO_AGAIN

 

[drmike]

... and Burst not paying their electric bill....

Let's just say there is more to that.  They were sued in 2012 for $200k+ in unpaid electric bills from a utility wholesaler.

 

[Francisco]

... and Burst not paying their electric bill....

Let's just say there is more to that.  They were sued in 2012 for $200k+ in unpaid electric bills from a utility wholesaler.

God damn son.

Francisco

 

[peterw]

47402 / 79.2 = 598.5 1A draw servers.

Obviously, you have switches, routers, NOC gear, batteries, PDUs and other losses.

So how many servers really did Burst have in Dunmore ? 

Answer: not many.

Only 500 and so servers?

Maybe if VolumeDrive had paid their bills, then BurstNET could have paid theirs?

That would explain a lot. VolumeDrive was a big part of BurstNET. They did not recover from this.

 

[drmike]

I posted in prior mass document thread that Burst in their own press said they went from 30k customers to 12k customers in less than a year (2013-2014).  Some of that decline was divesting of the UK.  Still curiously HUGE drop.

Speculation on server count, but, sheerly on power draw of a rather pathetic 1A 110V draw, yeah 500 servers at one point would be a high water mark.   Electric usage numbers fluctuate and I haven't a clue of their per KwH rate.  Doubt it was even as low as 5 cents, but it is industrial space, so possible back then.

Would be nice to see what volumeDrive had to say

 

[rds100]

Maybe this was before the Scranton to Dunmore move? When did that happen?

 

[drmike]

Which part @rds100 ?   I can timeline it probably...

The 200k$ electric bill was certainly the Scranton facility.

The eviction notices certainly are for the Dunmore facility and they are inclusive of the much smaller, still unpaid electric bills + lease payables.

 

[VPSCorey]

Datacenters get better rates than that.  Were a steady load on the system which utilities love from a capacity generating perspective.

 

[rds100]

@drmike i mean the calculation of the number of servers based on the electric bill. Was this an electric bill for a period when all the PA servers should have been in that place, or for a period before that?

 

[ihatetonyy]

Nominating you for the Pulitzer for Investigative Reporting.

Also, VolumeDrive up and ran in August, right?

$7.00 (or less) question: were they already in default to Burst before then, or did they see the writing on the wall?

 

[drmike]

Well let's see... These are the electric bill totals in the Landlord's materials submitted with suit to the Lackwanna County Civil Court... submitted within the timeline of the whole bigger event.

OCTOBER 17, 2011           <--- Backlog funds Digiport (see 9/4/2013 below)

JANUARY 3, 2012              <---  Backlog Capital Funds BurstNET

JANUARY 5, 2012              <---  Backlog Capital, LLC, moves HQs to Pilot Mountain, NC.

JANUARY 17, 2012           <---  Harbor Ridge Capital, an M&A advisory group focused on lower middle market technology companies, announced it has completed a capital raise for BurstNET Technologies Inc., which was funded by an undisclosed institutional investor.

8-3 - 9-04-2012 = $2439.45 

9-4 - 9-30-2012= $2237.46  <--- 09/17 Relocates corporate offices to new facility, begins construction Phase I10-1 - 10-4-2012= $355.51  ~   3 day billing period!?!?!

10-4 - 11-2-2012 = $5891.27

11-2 - 12/4/2012 = $7097.65

12-4 - 1/4/2013  = $5411.18  <---- FIRST LATE PAYMENT MADE IN THIS SPAN

1-4 - 2/4/2013    = $2370.10 <---  NEW DUNMORE DATA CENTER TO OPEN ABOUT HERE ACCORDING TO PRESS
2-4 - 3/5/2013    = $3053.98 <--- JANUARY OR FEBRUARY 2013

3-5 - 4/4/2013    = $3510.14

4-5 - 5/6/2013    = $4394.68

5-6 - 6/5/2013    = $4828.80

6-5 - 7/5/2013    = $7499.96

7-5 - 8/5/2013    = $11,217.60 <--- UKFast acquired UK assets of Burst  "the deal with BurstNET for an undisclosed sum will see an additional 1,500 customers transfer " http://www.channelregister.co.uk/2013/07/05/ukfast_burstnet/

8-5 - 9/4/2013    = $10,240.30 <--- volumeDrive moved out of Burst (notice electric downtick next month?): http://www.webhostingtalk.com/showthread.php?t=1296858 

9-4 - 10/4/2013 = $9301.57  <--- public acquisition of Digiport of Miami, Florida

                                                    <--- Lease #1 - default date September 15, 2013, and no payments made since.

                                                    <--- Lease #2 - default date September 15, 2013, and no payments made since.

                                                    <--- Lease #4 - default date September 15, 2013, and no payments made since.

10-4 - 11/4/2013 = $9338.00 <--- 10 day notice to pay rent or quit posted

NOVEMBER 8, 2013            <---  Second 10 day notice to pay rent or quit posted

                                                    <--- Contract #5 - default date November 10, 2013, and no payments made since.

DECEMBER 2013                <---   

JANUARY 2014                    <---  1/4  Completion and full integration of the acquired Digiport, Inc. 

                                                    <---  1/22 Burst.net abandons Corexchange facility in Dallas

FEBRUARY 2014                 <--- 2/5 14CV1008 Civil Lawsuit filed in Lackwanna County, PA for 5 different leases/                                                               contracts

                                                    <--- 2/6  BURSTNET® announces new Chief Executive Officer (CEO) - JW Ray

                                                    <--- 2/21 Welcome Art Faccone as Vice President of Client Care.

                                                    <--- Lease #3 - default date February 24, 2014

MARCH 2014                         <--- Days to weeks notice of move from Pennsylvania to DC74 in North Carolina

MARCH 22-23, 2014            <--- Dedicated servers moved from Dunmore, PA, and Chicago Illinois to NC

MARCH 29-30, 2014            <--- Colo customers to be moved from Dunmore, PA to North Carolina

Now, should note that you can believe in June to July they either mass increased server count or summer weather arrived.  I'm sticking with electric for servers and related being small $3-4k a month, rest of inflated electric is cooling load.

 

[drmike]

opcorn: POPCORN opcorn:

 

[Kris]

You do seem to be on a roll lately.  opcorn:

 

[rds100]

I wonder how is it possible to have so many overdue electricity bills. Here if the electricity bill is not paid, the power is cut off.

What's the standard procedure for disconnecting a non-paying customer in USA?

 

[drmike]

I wonder how is it possible to have so many overdue electricity bills. Here if the electricity bill is not paid, the power is cut off.

What's the standard procedure for disconnecting a non-paying customer in USA?

That's simple actually   As part of their industrial space lease, the landlord assumed the electric bills and passed such through/along.

In commercial leasing this sort of thing does often happen.  Depending on type of business, the electric possibly can be included in your lease payment (i.e. no cost increase or separate payable).  Semi-odd to see it going on where the customer mass racks equipment 24/7 operation and where the customer/lease holder was in very same county being sued for failure to pay for electric at prior location.

In fairness, date on the suit might mean it wasn't in public records then.

But yeah, Landlord at Dunmore was way too nice for way too long.

 

[DomainBop]

Mark from Youmura (Delimiter) posted on LET a few days ago that he saw a document (I'm assuming it was a UCC) that Burst had a $975K line of credit that was secured against the DC in Dunsmore...if anyone can find a copy of that UCC...

edit:

Also, VolumeDrive up and ran in August, right?

$7.00 (or less) question: were they already in default to Burst before then, or did they see the writing on the wall?

Allegedly in default to Burst but no documents (or lawsuits) have surfaced yet to prove  Burst's claims that VD hadn't been paying their bills and owed them north of $100K (?).  The panic shown on WHT by then CEO Shawn after VD jumped ship seemed more like "oh shit, we're screwed, a big chunk of our revenues just walked out the door" then "a deadbeat who wasn't paying us and was a financial burden just left"