KIT Digital, the American business which bought York-based video company ioko 365, has announced a restructuring under US insolvency law.

The digital television and media group has filed for Chapter 11 bankruptcy for its non-operating parent holding company, KIT digital Inc.

Allan Dunn, general manager for KIT Digital in York and former finance director of ioko, said the York operation, which is behind online video services for the likes of BBC iPlayer and Channel 4 OD, was still run as a separate legal entity and would continue business as usual.

Mr Dunn said that KIT had been struggling over the past few years after going on the acquisition trail, buying about 20 businesses over a three-year period.

ioko, which was started at York Science Park in 1995 by David Griffiths and Mark Christie with £100,000 of private investment, was bought for £50 million in May 2011.

About nine months ago a new executive management team, involving three personnel from ioko including Mr Dunn, was put in charge and decided to divest of poor performing businesses, lower costs and concentrate on its core successful businesses, which include ioko.

He said when they sold the business to KIT it had offices in California, Australia, Malaga and the UK. Only the US business became part of KIT’s American business.

“Everything else stayed the same,” he said. “We have not lost a client since the KIT acquisition and have added seven to ten per cent to our revenue from continuing like-for-like sales.

“It has been hard work at times, dealing with existing and potential customers given the news around KIT’s restructuring, but we’re seeing this Chapter 11 as cleansing the overall group structure.” He said the business still employed 250 people across London and York, with 200 in York, and they currently had 20 open vacancies across the UK.

KIT’s three largest shareholders, Prescott Group Capital Management, JEC Capital Partners and Ratio Capital Partners, have agreed to fund the reorganisation of the business to become a newly formed group entity called Piksel.

Mr Dunn said it was likely, once the deal has been approved, that the York operation would also be branded Piksel.

He said he expected it would enable them to invest in growth.