The end might be near for the once-popular Loot Crate after the company filed for bankruptcy and let go dozens of its employees.
The subscription box service revealed on Monday that it has filed for Chapter 11 Bankruptcy to facilitate the sale of all its assets to Loot Crate Acquisition LLC, an affiliate of existing Loot Crate investor Money Chest LLC.
The move is expected to give Loot Crate a $10 million loan to help keep its operations running as it undergoes acquisition.
Before the bankruptcy announcement, Loot Crate had already laid off 150 of its warehouse employees last month.
Money Struggles
Loot Crate has enjoyed a relatively quick rise to the top of the business world, gaining more than 200,000 subscribers in 10 countries over the first two years of its existence.
The company provided its subscribers a monthly shipment of "geek and gamer products," such as T-shirts, gadgets, gear, figurines, and even limited-edition collectibles. Most of the items in the loot boxes are linked to popular media such as gaming, sports, science fiction, and other facets of pop culture.
Loot Crate became so popular that it even made it to the number 1 spot of Inc.com's Fastest Growing Private Companies and appeared on Deloitte's Fast 500 North America ranking in 2016.
However, the company couldn't keep its momentum moving forward and eventually suffered a few major setbacks. It is said to be in the red for more than $30 million and owes the government nearly $5.9 million in unpaid taxes.
While Loot Crate reportedly sold $20 million worth of goods, it has yet to ship the products to its subscribers. This led to its credit-card processor to withhold its customer billings.
Loot Crate also had defaulted on a loan from Breakwater Management in 2017, though it was later able to refinance it through another loan from an affiliate of Atalaya Capital. Money Chest bought the loan and has agreed to give a bankruptcy loan to Loot Crate.
Because of its financial struggles, Loot Crate had to close down its Vernon warehouse and laid off 150 workers. All its shipping and receiving facilities were transferred to a third-party logistics firm.
Loot Crate had to lay off an additional 50 employees last week, bringing its current workforce to just 60 full-time workers.
Acquisition By Money Chest
Stuart Kaufman, chief restructuring officer for Loot Crate, said a company associated with Money Chest has agreed to serve as the stalking horse bidder for the company throughout its upcoming sale. The terms of the acquisition will be submitted to court later this week.
