BlueHippo Funding, the Woodlawn-based electronics sales company that's been dogged by consumer complaints for years, filed Wednesday for Chapter 7 bankruptcy liquidation status - a move signaling the likelihood that the company will soon shut down.

BlueHippo had sought bankruptcy reorganization protection last month when its payment processor's bank unexpectedly blocked its funds, leaving the company unable to pay creditors. BlueHippo petitioned a Delaware bankruptcy court judge to allow the funds to be released to the company, but its request was denied on Dec. 2, according to court records.


Without access to the funds held by Checkgateway LLC, BlueHippo "will not be able to satisfy administrative expenses that will continue to accrue if these cases are maintained in Chapter 11 [reorganization]," according to the filing. The company has a bankruptcy court hearing on its Chapter 7 motion on Dec. 23.

BlueHippo's owner, Joseph K. Rensin of Ellicott City, did not return a phone call seeking comment Wednesday.


An attorney representing BlueHippo in bankruptcy court said he was not authorized to comment.

Generally, under Chapter 7, a company ceases operations and works to sell off its assets to satisfy creditors. A former employee, who spoke on condition of anonymity because he was not authorized to speak for the company, said that Rensin laid off an unspecified number of employees on Friday and retained a small team of workers this week to slowly shut down the company.

In recent years, the Federal Trade Commission and regulators in several states, including Maryland, have accused the company of deceptive practices, of overcharging for computers and electronics, and of failing to deliver products sold to typically low-income, poor-credit customers.

The Maryland attorney general's office settled a case with BlueHippo two years ago, and the company had to pay $3.5 million in restitution to customers. As part of the deal, BlueHippo could no longer do business with customers in the state, though it operated out of offices in Woodlawn.

Last year, Blue Hippo agreed to pay another $3.5 million in restitution after settling an inquiry by the Federal Trade Commission.

The FTC this fall triggered BlueHippo's latest woes with follow-up legal action. On Nov. 12, the FTC asked a court to find BlueHippo in contempt of its settlement, claiming it was still taking money from consumers while failing to deliver computers. That FTC move led the payments processor to withhold funds from BlueHippo.