http://nypost.com/2015/03/23/streetwear-site-may-have-to-file-for-bankruptcy/
Word on the street: Karmaloop may file for bankruptcy this week.
The Boston-based streetwear site — a dot-com darling just a few years ago with ambitious plans for growth — is scrambling to avoid a Chapter 11 filing, sources told The Post.
Chie Executive Greg Selkoe is in talks with investors including a New York-based private-equity firm to pay off a portion of the company’s secured debt while adding $10 million in working capital to the business, said one source.
Still, those talks could fall apart, insiders said, leaving Karmaloop’s investors liable for as much as $100 million in writedowns on debt and equity.
Those investors include the prominent New York VC fund Insight Venture Partners, which has poured about $50 million in unsecured loans and equity into Karmaloop, insiders said. Reps for Insight and Karmaloop declined to comment.
After racking up nearly $120 million in revenue in 2013, Karmaloop’s business plunged below $100 million last year as debt obligations crippled operations, sources said.
The site’s troubles have spilled onto social media, with irate customers complaining on Facebook, Twitter and Instagram about undelivered sneakers, tank tops and T-shirts.
“I am grinding extra hard to fix it!” Selkoe said in a Feb. 24 tweet. “Like make ur self sick kinda s- -t, no sleep etc But we gonna make it up to @Karmaloop is my fam & life.”
One insider said Karmaloop “had the most selection and the best prices, but that created inventory obsolescence issues” as it struggled to sell all that it had.
A second insider said Karmaloop had racked up $40 million in debt related to flopped side ventures by Selkoe including women’s line MissKL.
Word on the street: Karmaloop may file for bankruptcy this week.
The Boston-based streetwear site — a dot-com darling just a few years ago with ambitious plans for growth — is scrambling to avoid a Chapter 11 filing, sources told The Post.
Chie Executive Greg Selkoe is in talks with investors including a New York-based private-equity firm to pay off a portion of the company’s secured debt while adding $10 million in working capital to the business, said one source.
Still, those talks could fall apart, insiders said, leaving Karmaloop’s investors liable for as much as $100 million in writedowns on debt and equity.
Those investors include the prominent New York VC fund Insight Venture Partners, which has poured about $50 million in unsecured loans and equity into Karmaloop, insiders said. Reps for Insight and Karmaloop declined to comment.
After racking up nearly $120 million in revenue in 2013, Karmaloop’s business plunged below $100 million last year as debt obligations crippled operations, sources said.
The site’s troubles have spilled onto social media, with irate customers complaining on Facebook, Twitter and Instagram about undelivered sneakers, tank tops and T-shirts.
“I am grinding extra hard to fix it!” Selkoe said in a Feb. 24 tweet. “Like make ur self sick kinda s- -t, no sleep etc But we gonna make it up to @Karmaloop is my fam & life.”
One insider said Karmaloop “had the most selection and the best prices, but that created inventory obsolescence issues” as it struggled to sell all that it had.
A second insider said Karmaloop had racked up $40 million in debt related to flopped side ventures by Selkoe including women’s line MissKL.
