Karmaloop Restructuring, May be Bought by Damon Dash and Kanye West
E-commerce streetwear retailer Karmaloop Inc. announced a restructuring as a part of a chapter 11 bankruptcy filing. The company is awaiting court approval for debtor-in-possession financing led by Comvest Partners and a Section 363 sale process. At least one potential buyer has already emerged: entrepreneur and former Jay-Z business partner Damon Dash has said he and Kanye West want to buy Karmaloop.
Boston-based Karmaloop Inc. operates Karmaloop.com, a Europe-based e-commerce site called StreetAmmo, a members-only flash sale site called PLNDR.com and an online marketplace called Kazbah – all of which remain in business and profitable, the company says.
“The Karmaloop brand is solid and powerful, we simply have been carrying too much debt from past ancillary business startups that were discontinued,” said CEO and founder Greg Selkoe in a statement. “We’re excited to be able to restructure Karmaloop to focus on and enhance our core business strategy and continue to execute on our plans for profitability. This restructuring will assist with our strategic move to vendor direct.”
Karmaloop Inc. has assets of $10 million to $50 million in assets and liabilities of $100 million to $500 million. The problem, the company said, is debt from four new divisions and a failed video content project called KarmaloopTV. Those divisions include Monark Box (a limited edition subscription service), Boylston Trading (a higher price point e-commerce site), and a women’s site called Miss KL.
“Over time, these ventures proved not to be economically feasible and the debt that remained as a vestige of these past efforts was hindering working capital for the core business,” the company said in a statement.