Online retailer, Karmaloop announced Thursday it, along with all of its businesses, Karmaloop.com, PLNDR, Kazbah and Karmaloop Europe, will be acquired by Comvest Partners (Comvest) of West Palm Beach, Fla. and Chicago-based CapX Partners (CapX).
Although, there was speculation that Kanye West would buy the company, Comvest and CaX’s served as the stalking horse bidder at the beginning of bankruptcy sale process and will close on the sale in early June.
This acquisition follows the Boston-based streetwear site’s decision to declare bankruptcy in March.
Karmaloop’s founder and CEO Greg Selkoe, who started the business in his parents’ basement in 2000, will also be stepping down but will remain with the company. The new CEO will be announced next week.
“We’re excited to enter into this new chapter of the Karmaloop story,” said Robert O’Sullivan of Comvest Partner. “We’ve been involved with the Company since 2012 and are big believers in the brand’s power and potential. As such, we’re delighted that the process now allows us to deepen our relationship with the brand. With ample capital for growth and a debt-free balance sheet, Karmaloop is going to have a fantastic future. The loyal, dedicated Karmaloop customer base will see, over the coming months, new initiatives dedicated to forging a strategic growth path while retaining and building on the essence of the Karmaloop brand.”
Comvest and CapX previously provided $3 million in debtor-in-possession (DIP) financing to Karmaloop to help support its bankruptcy case and sale process and are investing millions more as part of the acquisition.
The companies will obtain all of Karmaloop’s assets and assume certain other obligations.
The restructuring and new funding of the company is said to eliminate existing debt that was acquired to support the launch of four new business divisions and the development of television content from 2011 to 2013.
The online retailer reportedly owes $8 million to New York-based Insight Venture Partners and almost $1 million to Google Inc., among its biggest creditors.