The geek-and-gaming-centric subscription box service Loot Crate has filed for Chapter 11 bankruptcy and laid off approximately 50 employees.
According to The LA Times, "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." Additionally, the company owes more than $5.87 million in sales taxes.
Loot Crate was founded in 2012 by Chris Davis and Matthew Arevalo and within two years, the company had over 200,000 subscribers across the globe. The boxes customers receive generally include things such as figurines, t-shirts, comic books and various other accessories and collectibles. The company also uses rotating monthly themes to determine what type of merchandise its subscribers receive.
Once one of the fastest-growing startups, Loot Crate's woes began after defaulting on a loan in 2017. That loan was later refinanced and has now been purchased by Money Chest, LLC, which will provide Loot Crate with a $10 million bankruptcy loan and serve as its stalking horse bidder.
"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," Davis said in a statement. "We are very pleased with our progress from an operational efficiency standpoint, however, the company still faces liquidity issues."
"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."
"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," he added.