Boston-based streetwear site Karmaloop Inc. joined the ranks of retailers seeking legal protection from creditors, filing for Chapter 11 in a Delaware bankruptcy court Monday with plans to sell a majority stake in the online clothing business.
Rumor has it that hip-hop moguls Kanye West and Damon Dash have expressed interest.
The filing listed $100 million—$500 million in debt against $10 million—$50 million in assets. Karmaloop said Comvest Partners of Florida along with co-lender CapX Partners have provided an investment of $3 million to support the restructuring under the bankruptcy code.
The company reportedly owes $8 million to Insight Venture Partners of New York and nearly $1 million to Google Inc., among its biggest creditors.
Founder and CEO Greg Selkoe, who started the business in his parents’ basement in 2000, said in a statement that Karmaloop has been saddled with debt from failed off-shoots, including subscription service Monark Box, members-only Boylston Trading Company and women’s line Miss KL. An insider told The New York Post that the company racked up to $40 million in debt related to those ventures.
“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,” he said. “This restructuring will assist with our strategic move to vendor direct.”
Karmaloop.com will continue to operate, as will its European offshoot StreetAmmo, its off-price members-only PLNDR division and the marketplace Kazbah.