Gaming software company Swarmio Media Holdings,  which has received about $5.7 million in funding from government agencies, has filed for creditor protection.

The IT company, which has had operations in Sydney and Halifax and is listed on the Canadian Securities Exchange, developed a platform that reduces the latencies between data centres, which reduces the time lag of gamers playing one another over great distances.

The company said in the past week that it has experienced “liquidity issues” and the board thought it best to seek creditor protection under the Companies' Creditors Arrangement Act. With its head office in the Toronto area, it is now involved in proceedings before the Ontario Superior Court of Justice.

“After careful consideration of all available alternatives and following thorough consultation with legal and financial advisors, the directors of the Swarmio Group determined that it is in the best interests of the Swarmio Group and all of its stakeholders to seek creditor protection under the CCAA,” said the company in a regulatory filing.

Swarmio is the second publicly listed, innovation-driven company with Nova Scotian links to file for bankruptcy protection this year. Dartmouth drug discovery company IMV, which is listed on the Nasdaq and the Toronto Stock Exchange, sought creditor protection in Canada and the U.S. in May.

Swarmio’s platform was designed to compensate for latency in multi-player online games. When players in different parts of the world are competing against each other, the system is much faster for the player closest to the gaming company’s server, giving them an advantage. Swarmio’s solution was to develop a network of remote servers, so each player is accessing servers the same distance away.

Founder and CEO Vijai Karthigesu previously said that he hoped to build up a development centre in Cape Breton, as well as have operations in Halifax. In November 2021, the company listed on the CSE, an alternative stock market, raising $6.3 million and giving the company a market capitalization of about $55 million at the time.

Swarmio’s shares closed on their first day of trading at 56 cents, but have now fallen to just half a cent, giving it a market capitalization of about $550,000.

Innovacorp (now Invest Nova Scotia) invested $3.5 million in the company, according to someone familiar with the investment. Filings from the federal government show that Swarmio also received $900,000 in financing (mostly loans) from the Atlantic Canada Opportunities Agency and $1.3 million in grants from the National Research Council’s IRAP program.