Loot Crate

Loot Crate is out of loot.

The company says it’s business as usual, but Loot Crate recently laid of 50 employees at facilities in California and Pennsylvania as the company prepped to file its voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code in Wilmington, Delaware on Monday. In May, filings in California indicated that the company was looking to lay off as many of 150 employees.

Just two years ago, Loot Crate — one of the best-known purveyors of pop culture subscription boxes — was hailed as “the nation’s fastest-growing startup,” closing an $18.5 million round of financing in 2016, before scaling too quickly and laying off a portion of its staff in 2017. Under the filing, the company is selling “substantially all of its assets” to Loot Crate Acquisition LLC.

It’s a familiar tale that we’ve heard many times in recent years — in accordance with Section 363 of the U.S. Bankruptcy Code, other companies will have an opportunity to submit competing offers for the assets, with the sale expected to close within 45 days.

Debtor-in-possession (DIP) financing is coming from Money Chest LLC, an investor in Loot Crate and affiliate of the aforementioned Loot Crate Acquisition LLC. Money Chest will provide up to $10 million in new financing to continue operations.

“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,” says Loot Crate CEO Chris Davis. “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,” he adds.

Loot Crate claims that funds from Money Chest “coupled with ongoing revenue from subscriptions will be used to maintain normal operations.”

In the past, the company has maintained relationships with major licensees including Marvel, DC Entertainment, Warner Bros. Consumer Products, and others. Earlier this year, Walmart launched an expanded pop culture section that includes Loot Crates sold at brick-and-mortar locations.

Loot Crate says it’s more than $30 million in debt, and subscriber fees aside, among the top 30 creditors that Loot Crate owes, the largest single amount due is $4.7 million to Wisconsin-based screenprinter, Something Inked. Additional debts are owed to a number of toy, collectible, and entertainment companies, including Marvel Brands, Bio World Merchandising, Gold Wing Toys, Just Funky, and Major League Baseball (MLB).

About the author

James Zahn

James Zahn

James Zahn, AKA The Rock Father, is Editor-in-Chief of The Toy Book, a Senior Editor at The Toy Insider and The Pop Insider, and Editor of The Toy Report, The Toy Book‘s weekly industry newsletter. As a pop culture and toy industry expert, Zahn has appeared as a panelist and guest at events including Comic-Con International: San Diego (SDCC) Wizard World Chicago, and the ASTRA Marketplace & Academy. Zahn has more than 30 years of experience in the entertainment, retail, and publishing industries, and is frequently called upon to offer expert commentary for publications such as Forbes, Marketwatch, the Wall Street Journal, the New York Times, USA Today, Reuters, the Washington Post, and more. James has appeared on History Channel’s Modern Marvels, was interviewed by Larry King and Anderson Cooper, and has been seen on Yahoo! Finance, CNN, CNBC, FOX Business, NBC, ABC, CBS, WGN, The CW, and more. Zahn joined the Adventure Media & Events family in 2016, initially serving as a member of the Parent Advisory Board after penning articles for the Netflix Stream Team, Fandango Family, PBS KIDS, Sprout Parents (now Universal Kids), PopSugar, and Chicago Parent. He eventually joined the company full time as a Senior Editor and moved up the ranks to Deputy Editor and Editor-in-Chief.