Popular merchandise supplier Loot Crate has announced that it has filed for bankruptcy.
The company filed for Chapter 11 bankruptcy on Monday after announcing that they had laid off over 50 employees with 60 full-time employees remaining.
In U.S. Bankruptcy law, a Chapter 11 bankruptcy is usually what occurs when a business is still hoping to continue operating in the feature. This requires the company to reorganize their debts and assets and proceed to pay them off.
The company has agreed to sell its assets to Loot Crate Acquisitions, LLC. This reportedly will have no affect on whether subscribers to the service will still receive their monthly boxes. Once the assets are released later in the week, it is expected that prospective bidders will have 45 days to submit their offers for purchasing Loot Crate’s assets.
“We have worked diligently to overcome challenges with our capital structure, along with legacy issues the Company has been struggling with for the past 18 months. We are very pleased with our progress from an operational efficiency standpoint, however, the company still faces liquidity issues,” said Loot Crate’s Chief Executive Officer Chris Davis.
“After careful review of a wide range of available options, management determined that a sale of the Company is in the best interests of all parties, including our valued Looters (customers) and employees.”
Money Chest LLC, a current investor in Loot Crate has committed up to $10 million to help facilitate the sale and transition.
“During the sale process we will have the financial resources to purchase the goods and services necessary to fulfill our Looters’ needs and continue the high-quality service and support they have come to expect from our Loot Crate team,” Davis added.
Bloomberg has recently reported that Loot Crate’s credit processor has yet to clear customer billings and has yet to ship $20 million in merchandise boxes to subscribers. The merchandisers also reportedly owes more than $30 million in trade debt and is nearly $6 million behind in sales taxes.
What do you think of this news? Are you sad that Loot Crate is struggling?