Seattle software company Entellium filed for Chapter 11 bankruptcy protection Tuesday, asking a federal judge to approve a rescue plan to keep the company operating while its assets can be sold.

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Seattle software company Entellium filed for Chapter 11 bankruptcy protection Tuesday, asking a federal judge to approve a rescue plan to keep the company operating while its assets can be sold.

The once-promising company was thrown into chaos after the Oct. 7 arrests of its chief executive and financial officer, who were charged with fraud and accused of grossly inflating company revenues to lure tens of millions of dollars from investors.

On Tuesday, Entellium filed an emergency motion to authorize funds to pay its 14 remaining employees and keep the lights on.

Tuesday’s filing “allows the company to reorganize and basically gives the company some breathing room, not only from lawsuits but also time to freeze all its debts and administer the estate in an orderly fashion,” said Katriana Samiljan, an attorney with Bush, Strout & Kornfeld who is representing Entellium.

Former CEO Paul Johnston and financial officer Parrish Jones abruptly resigned Sept. 30, and an investigation found they had been keeping two sets of books, one with real revenue figures and another with “cooked” figures they presented to Entellium’s board, according to the complaint filed in U.S. District Court in Seattle.

The bankruptcy filing reveals a trail of hundreds of angry creditors, shareholders and laid-off employees across the U.S. and in at least eight other countries.

Entellium has entered an agreement to sell its intellectual property to Intuit, a process that could take as long as 60 days, according to the bankruptcy filing. Intuit is the lead bidder, but other companies can submit competing offers.

Starting in October, Entellium contacted 28 potential buyers, leading to discussions with seven of them, and four offers to buy the company’s customer base.

It started talks with Intuit and has negotiated with the Mountain View, Calif., financial software maker for more than a month about a proposed sale of all of its assets for about $7.6 million, according to court documents.

“We obviously hope that we’re chosen as the successful bidder, but that’s determined by the judge,” said Intuit spokeswoman Diane Carlini.

Entellium’s bankruptcy filing states it has $37.7 million in assets and $12.7 million in liabilities. It lists its intellectual property as six registered trademarks and trademark applications, including its Rave brand customer-relationship-management software, and 22 registered domain names.

The bankruptcy filing lists creditors including Ignition Venture Partners, WestRiver Capital of Kirkland, Malaysia Venture Capital Management, Middlefield Ventures, Sigma Partners and Silicon Valley Bank.

The filing also includes an 11-page list of equity security holders across the U.S. and in Hong Kong, Singapore, Malaysia, Canada, Australia, the United Kingdom, Dubai and Sri Lanka.

Meanwhile, Entellium Vice President Charles Miller and a handful of other Entellium employees have been keeping the company operating the past two months.

Miller said Tuesday the employees who have remained have been vilified in blogs, and he was named in a lawsuit by an employee let go without severance.

“This has been no picnic by any stretch of the imagination,” he said.

When Johnston and Jones left the company, Miller said, “there was absolutely no money in the account,” and remaining executives had to negotiate with investors to keep paying health benefits.

“People that are here have been busting their rear ends to provide support to customers, working over the holidays, doing everything they possibly can to sustain the company … so we would have any assets worth acquiring.”

Despite the turmoil, Entellium still has about 700 customers, Miller said. It wasn’t clear how many of those customers would be moved to Intuit in a sale of assets.

In a separate filing late Monday, attorneys for Johnston and Jones agreed to extend the deadline for an indictment to Dec. 29.

Jones’ attorney said he has reached an agreement with federal prosecutors to resolve the case and expects a plea hearing to be set the week of Dec. 15.

A hearing is scheduled for 2 p.m. Thursday in U.S. Bankruptcy Court in Seattle.

Kristi Heim: 206-464-2718 or Seattle Times researcher David Turim contributed to this report.