Loot Crate Files for Bankruptcy


Loot Crate, the fan subscription box service, has filed for bankruptcy with plans to sell off substantially all of its assets to Loot Crate Acquisition LLC and reorganize.


Loot Crate and its affiliates filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in Wilmington, Delaware. The terms of the agreement will be formalized and submitted to the Court later this week.


In accordance with Section 363 of the U.S. Bankruptcy Code, other companies will have an opportunity to submit competing offers for the assets. The company expects the sale to be completed within 45 days.


In the court filings, Loot Crate reported an estimated 200-299 creditors, and more than $30 million in a bankruptcy filing. The filing also revealed an additional $20 million in paid customer orders that have not yet shipped.


“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,” said Loot Crate’s CEO Chris Davis. “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.”


The statement, of course, follows the company’s most recent round of layoffs. The company dismissed 50 people on Saturday without severance, reducing its full-time staff to just 60 people. In May, the company announced its intent to layoff 150 employees in a filing with California state authorities. At the time, Loot Crate told Business Insider of the layoffs, “it’s closing its in-house warehouse operations and moving to a third-party logistics provider, and that the layoffs were ‘predominantly our on-call shipping and receiving staff.'”


Loot Crate received a commitment for up to $10 million in new financing from Money Chest LLC, an investor in the company. These funds coupled with ongoing revenue from subscriptions 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,” Davis said.


Davis also emphasized that employees and customers should not notice any difference in operations as a result of the filing or during the sale process except for the better.


“This transaction represents good news for our employees, our customers, and our other constituents,” he said. “It will provide Loot Crate with greater access to the financial resources necessary to continue to prosper and grow.  By utilizing the Chapter 11 process, we are able to ensure an expedited and orderly transition.”