Loot Crate files for bankruptcy and plans to sell itself
Subscription box startup Loot Crate Inc. filed for Chapter 11 bankruptcy with plans to sell itself after running low on cash.
The Los Angeles company ships curated fan boxes filled with “geek and gamer products” to subscribers each month, Chief Restructuring Officer Stuart Kaufman said in a court declaration filed in Wilmington, Del. The contents include figurines, shirts, gear, gadgets and limited-edition collectibles tied to science fiction, gaming, sports and pop culture. They’re shipped to more than 250,000 recurring subscribers, court papers show.
But the company is now in dire financial straits. Its credit-card processor is withholding customer billings, Loot Crate hasn’t shipped goods tied to $20 million in sales, and the company owes more than $30 million in trade debt, Kaufman said. It’s also behind on more than $5.87 million in sales taxes.
The company dismissed about 50 people last week and now has about 60 full-time employees. It’s seeking to sell itself quickly during bankruptcy.
Loot Crate is one of many subscription box services that have gained popularity in recent years, including food box seller Blue Apron Holdings Inc. and fashion service Stitch Fix Inc.
Loot Crate was co-founded in 2012 by Christopher Davis, who owns a stake of just over 50%. Within a few years it was ballyhooed as the nation’s fastest-growing startup, but soon serious cracks began to show. The firm defaulted on a loan from Breakwater Management in 2017 but was able to refinance it with a $21-million term loan from an Atalaya Capital affiliate in August 2018. Another entity, Money Chest LLC, has now bought that loan and agreed to provide a $10-million bankruptcy loan to Loot Crate.
A firm tied to Money Chest and “one of the largest and best-run collectible manufacturers and distributors in the world” has agreed to act as the stalking horse bidder for Loot Crate, Kaufman said. Terms of the deal will be submitted to the court this week, the company said in a statement.