NEW YORK ( TheStreet) -- The founders of social networking site Bebo.com Inc. have won an auction of the company with a bid of more than 10 times what they offered to be the stalking horse. Still, the winning offer represents roughly one-tenth the price at which the debtor last changed hands in 2010.Michael and Xochi Birch, the husband and wife founders and minority shareholders of Bebo, won a Monday auction of Bebo.com through vehicle MXB Holdings Inc. with a bid of just over $1 million, according to a source with knowledge of the case. Michael Birch tweeted: "We just bought Bebo back for $1m. Can we actually re-invent it? Who knows, but it will be fun trying." San Francisco. Created in 2005, Bebo.com was purchased by AOL Inc. for $850 million in 2008, when it was the third-largest social networking site in the U.S., according to a May 14 declaration by receiver Michael Ong of Burke Capital Corp. AOL sold the company to private equity firm Criterion Capital Partners LLC for about $10 million in June 2010. Court papers said the company's value dropped, in part, because AOL did not continue to invest in it so that it would remain competitive with Facebook Inc.
Bebo filed for Chapter 11 protection on May 9. According to court papers, the company lost more than $2 million over the past year and nine months because of falling revenue and has many outstanding liabilities. Revenue in 2012 fell to $1.22 million, from $2.28 million a year earlier. A group of minority shareholders sued Criterion, majority owner Adam Levin, Bebo director Tristen Lazareff and Bebo on March 5, 2012, in the Superior Court of the State of California in San Francisco, alleging charges including breach of fiduciary duty, gross mismanagement, unjust enrichment, waste of corporate assets and abuse of control. The plaintiffs include Hecker Consultancy LLC, which owns 14.92% of Bebo; MXB, which owns 9.79%; and SV Angel LLC, which owns 1.96%. Quality Technology Services Santa Clara II LLC threatened to terminate all of Bebo's services if the company could not pay $118,518 by May 10. Bebo owed the company for data services. In its official schedules filed May 23, Bebo reported assets of $27,085 and liabilities of $1.76 million. Matthew A Lesnick and William F. Govier of Lesnick Prince & Pappas LLP are debtor counsel. Michael St. James of St. James Law PC represents MXB. -- Written by Aviva Gat in New York