Loot Crate, the monthly subscription memorabilia delivery service that was once named America’s Fastest-Growing Company, has filed for Chapter 11 bankruptcy but promises to fulfill all remaining orders that subscribers have already paid for. Based out of Los Angeles and founded by Chris Davis and Matthew Arevalo in 2012, Loot Crate’s initial popularity among video game players led to dozens of imitator companies over the years, which flooded the marketplace with cheaply-made merchandise and overpriced t-shirts.
Although still currently supported by upwards of 250,000 monthly subscribers and backed by Robert Downey Jr.’s venture capital firm Downey Ventures, Loot Crate has not managed to stay profitable over the past few years. In the bankruptcy filing, Loot Crate admitted to having debts of more than $30 million with an additional $2o million in unfilled, paid customer orders that have not yet been shipped. To help fulfill these final shipment promises the company plans to sell itself to Loot Crate Acquisition LLC and use funding from Money Chest LLC, a lending company and Loot Crate investor, that will hopefully provide enough money to complete these unfinished orders.
As reported by Gizmodo, Loot Crate’s Chapter 11 filing comes just one month after the company let go 150 warehouse workers and one week after an addition round of layoffs found the company with only 60 full-time employees left. On Twitter, one former employee stated that these firings happened with no warning and employees that were let go received no severance package.
In the press release, Loot Crate CEO and co-founder Chris Davis said that they were “Very pleased with our progress from an operational efficiency standpoint,” but admitted that the company faced too many other legacy and liquidity issues. He went on to say that current subscribers should see no change in their Loot Crate monthly shipments as the bankruptcy process begins, and promised that daily operations will go on as normal throughout, stressing that “Our employees will continue to be paid as usual.”
With Loot Crate having been such a trailblazer in online merchandise subscription services, it’s hard not to draw parallels to the recent closure and re-opening of Toys “R” Us, another company that first found commercial success but then slowly declined as more and more impostor and competitive companies rose around it. While Toys “R” Us was saved by a rush of nostalgia and intense corporate restructuring, Loot Crate’s deteriorating quality and occasional spotty service, with many subscribers having reported not receiving boxes since May of this year, does not bode well for their future. Perhaps in 2019, with practically every company from Disney to EA exploring the live subscription service model in one form or another, people just don’t want to pay a monthly fee to get a random box of cheap toys anymore.
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Source: Gizmodo
