Loot Crate, the subscription box service known for monthly shipments of geek and gamer gear, has filed for Chapter 11 bankruptcy amidst plans to sell itself for cash.
The company filed for bankruptcy earlier this week, and released a statement overnight detailing that issues over the past year and a half have contributed to its poor financial state. The LA Times reported in 2017 that Loot Crate defaulted on a $21 million USD loan, which caused the company to lay off 25 percent of its staff at the time
“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,” Loot Crate’s Chief Executive Officer Chris Davis said in a press release. “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.”
Loot Crate, which has over 250,000 subscribers, plans to ship all remaining orders despite its financial troubles. According to Bloomberg, Loot Crate has been withholding customer billing in recent months, has yet to ship $20 million worth of goods, and owes $30 million in back taxes. The bankruptcy announcement comes after the company laid off 50 employees last week. In July, Loot Crate closed its warehouse and laid off 150 workers in California. There are currently 60 full-time employees within the company.
By declaring bankruptcy, the plan is for Loot Crate to sell itself to Loot Crate Acquisition LLC, an affiliate of existing investor Money Chest LLC. Money Chest is loaning Loot Crate $10 million in financing in order to both facilitate the sale and to keep operations afloat in the meantime. Once the sale is finalized later this week, Loot Crate expects it to be completed in 45 days, during which other companies may bid on its assets in accordance with US law.
Loot Crate was founded in 2012, and is the most well known subscription box service when it comes to geek gear. Contents of its boxes frequently include apparel, figurines, and other collectibles tied to popular culture.
