Loot Crate, the subscription box retailer catering to gaming and pop culture enthusiasts, has filed for Chapter 11 bankruptcy. The company is planning to sell itself to Money Chest LLC, an investment group affiliated with one of the world’s largest collectible manufacturers and distributors, but other companies will have the opportunity to offer competing bids for Loot Crate’s assets. Loot Crate expects the sale to be completed within 45 days.
Founded in 2012, Loot Crate had achieved fast growth: the company now ships boxes to more than 250,000 recurring subscribers, according to court documents cited by Bloomberg. However, the company now faces severe financial woes. Loot Crate:
• Has not shipped customer orders tied to $20 million in sales;
• Owes more than $30 million in trade debt; and
• Is behind in paying more than $5.87 million in sales taxes.
Additionally, Bloomberg reports that Loot Crate’s credit card processor is withholding customer billings. The company dismissed an estimated 50 people earlier this month, and now has approximately 60 full-time employees.
A Loot Crate press release revealed that the company has received a commitment for up to $10 million in new financing from Money Chest, and these funds, coupled with ongoing subscription revenue, will be used to maintain normal operations. “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 the Loot Crate team,” said CEO Chris Davis in a statement.
The retailer had sought to expand its reach via partnerships with well-known retailers. In October 2018, Loot Crate entered an exclusive partnership to sell its collectibles in 3,500 Walmart stores. Later that month, the company made its subscriptions available via Amazon’s subscription box store.