In the very early hours of Monday morning, subscription box company Loot Crate filed for Chapter 11 Bankruptcy. This unfortunate news came just over a day after Loot Crate laid off 50 people. Following the firings on Saturday, Loot Crate now has just about 60 full time employees.
A Chapter 11 Bankruptcy usually occurs when a company is still hoping to continue its business in the future, as the voluntary action is more about reorganizing debts and assets, rather than halting its affairs altogether.
Loot Crate has agreed to sell its assets fo Loot Crate Acquisition LLC, though the initial release from the company suggests that subscribers will still receive their crates. Once the sale is formalized and submitted later in the week, other companies will have 45 days to submit competing offers for 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."
To help facilitate the sale and transition, Loot Crate has received a commitment of up to $10 million from Money Chest LLC, a current investor in the company.
"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.
According to Bloomberg, Loot Crate's credit-card processor is withholding customer billings, and the company has yet to ship products tied to $20 million in sales. Loot Crate reportedly owes more than $30 million in trade debt and is nearly $6 million behind in sales taxes.