Sad news as Loot Crate files for Chapter 11 bankruptcy, but it seems there might be a white horse riding in to potentially save the day.
Loot Crate Inc. has filed for Chapter 11 bankruptcy protection, with a company “affiliated with an investment group that includes one of the largest and best-run collectible manufacturers and distributors in the world” providing Debtor-in-Possession financing and acting as a stalking horse bidder, according to court documents provided by Wall Street Journal.
The Chapter 11 filing appears to have been precipitated at least in part by Loot Crate’s credit card processor, Vantiv, which had notified Loot Crate that it planned to cease processing charges Monday. Vantiv feared the potential losses if Loot Crate subscribers requested refunds for Crates not delivered, leaving Vantiv no way to recoup the money it had already forwarded to Loot Crate. Vantiv had also begun withholding money from charges.
As another factor impacting immediate liquidity for Loot Crate, Midtown Madison Management, which had provided $21 million in financing to the company last August, had begun sweeping funds from Loot Crate accounts (permissible under its loan agreement) over the last 10 days.
In addition to debts to lenders, Loot Crate owes over $20 million to its subscribers, who have prepaid their subscriptions but not yet received all their Crates, and $30 million to trade creditors. Loot Crate’s list of unsecured creditors included lenders, t-shirt manufacturers, professional service companies, the occasional licensed products company (Bio World is owed around $1.48 million), some licensing entities (MLB Advanced Media and Marvel Brands, owed $500,000 and $469,000, respectively), and Facebook, which was owed $1.04 million (guess Mark Zuckerberg won’t be able to tip after lunch this week).
Staff are being laid off but orders are being honoured before the company is bought out by Loot Crate Acquisition LLC, one of only 100 possible purchasers that had made an acceptable offer for the company.
