TelexFree Inc. filed for Chapter 11 bankruptcy on April 13, 2014, in the United States Bankruptcy Court for the District of Nevada. Directors James Merrill and Carlos Wanzeler approved the voluntary petition during a telephonic board meeting held at 8:11 pm that evening.

The company's financial model had proved unsustainable. Analysis showed TelexFree would face an estimated $1.14 billion in liabilities by the close of 2014. This figure far outstripped its 2013 revenue of $689 million, likely the company's peak investment year.

Even when accounting solely for AdCentral ROI commissions, which totaled $622 million, a deficit liability of $518 million remained for 2014. This calculation ignored all other commission payouts. The financial hole was substantial.

Problems for TelexFree investors became apparent days before the filing. Affiliates expected payouts on a Friday, but their money remained missing through Sunday. Initial unofficial reports cited payment processor issues. The bankruptcy filing then revealed the true cause.

The special board meeting included legal and financial representatives. Nancy Mitchell, Jody Davis, Maria DiConza, Jonathan Bell, Matt Hinker, Avi Fox, Zack Polidoro, and Michael Cohen attended from Greenberg Traurig LLP. Greg Garman and Teresa Pilatowicz represented Gordon Silver. Alvarez & Marsal sent Lawrence Hirsh, Bill Runge, Tim Meighan, and Aileen Daversa. Joe H. Craft, CPA, and Stuart A. MacMillan from Impact This Day, Inc. were also present.

The agenda focused on approving the voluntary petition for relief under Chapter 11 of the Bankruptcy Code. The Board unanimously resolved that filing was "desirable and in the best interests of the Corporation, its creditors and other parties in interest."

The bankruptcy application covers TelexFree Inc., TelexFree LLC, and TelexFree Financial Inc. The filing estimates liabilities between $0 and $50,000. This figure appears to be a gross underestimation, especially given the application includes a list detailing TelexFree's "creditors holding the 30 largest unsecured claims."