A Fresno, California-based company that trained tech workers from poor and mostly underrepresented neighborhoods collapsed, ending a venture it planned on Chicago’s South Side.
Bitwise Industries said in February it hoped to have 100 people working in Greater Grand Crossing by early 2024. But the company abruptly suspended operations in May, laying off 900 workers, and in June filed for bankruptcy. The layoffs included five Illinois workers, according to a filing with the state.
The company did not answer requests for comment Monday.
Statements on the Bitwise website said the company’s board took action after discovering major financial problems. The board said it fired the two co-CEOs, Jake Soberal and Irma Olguin Jr.
As part of a national expansion, Bitwise planned to lease 6,000 square feet at 7421 S. South Chicago Ave. as a temporary home starting in April. It eventually would have moved up the street to 7301-69 S. South Chicago Ave. into a planned development called Xchange Chicago, backed by the Comer Science & Education Foundation.
Bitwise was to have been in a hub for workforce and wellness training, Emily Emmerman, project manager for the Comer foundation, said in February. City officials awarded the foundation a $5 million grant to support its project. It’s unclear if Bitwise’s bankruptcy affects the development’s viability.
Emmerman and other foundation officials did not return messages seeking comment.
The city has not paid the grant, and the money remains available for the workforce center, said Peter Strazzabosco, spokesman for the Department of Planning and Development. The agency “will continue to work with the foundation on a path forward for the project,” he said.
Bitwise’s Chapter 7 bankruptcy provides for the company’s liquidation, with proceeds going to creditors. It faces several lawsuits alleging fraud, labor law violations and breach of contracts. And the Fresno Bee reported that the FBI is investigating the company “for potential criminal violations.”
The company had raised more than $200 million from backers such as Kapor Center, Motley Fool, Goldman Sachs Asset Management, Citibank and the Chicago-based nonprofit P33, chaired by Penny Pritzker.
P33 CEO Brad Henderson said that he was disheartened by Bitwise’s collapse.
“Though the company’s presence was nascent in Chicago, there was excitement and potential attached to what they might be able to bring to the South Side,” Henderson said.
“I’m both sad and disappointed that their promise for tech apprenticeships and upskilling opportunities within the community will not come to fruition. But we will continue to champion apprenticeships and reskilling as an important part of the solution for growing Chicago’s economy and reducing inequality.”
In its bankruptcy filing, Bitwise reported assets of $175.5 million against liabilities of $252 million.
It said it trained 10,000 people, mostly from what it called “underestimated” communities. It previously reported 10 locations in the U.S., including four in California.
