After 15 years in business, Karmaloop is reportedly on the verge of bankruptcy.
The online retailer, known for its wide selection of affordable streetwear, is struggling to avoid Chapter 11 filing, sources tell the NY Post. Insiders say CEO and founder Greg Selkoe is currently talking to investors to pay off a part of the Karmaloop’s secured debt while adding $10 million in working capital to the company. But if nothing comes out of those discussions, then investors, including the New York VC fund Insight Venture Partners, will be liable for up to $100 million in writedowns on debt and equity.
In 2011, Karmaloop increased its revenue up to $130 million, an 81-percent jump from 2010. However, the company racked in only $120 million in 2013, and less than $100 million last year “as debt obligations crippled operations,” the NY Post reports. Furthermore, the site has been facing harsh criticism from customers, who have taken to social media to complain about undelivered items.
Last month, Selkoe responded to the complaints, insisting he is personally working overtime to correct the mistakes.
Sources say the financial issues were also caused by Selkoe’s side ventures like Monark Box, Miss KL, and Boylston Trading—spinoff brands that reportedly lead to over $40 million of debt.
Selkoe has yet to comment on the reports. Stay tuned as more information comes through.
[via NY Post]
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