Boston streetwear company Karmaloop files for bankruptcy
Bankruptcy filing would allow clothing firm to restructure debt
Weighed down by millions in debt and by poor business ventures, the Boston streetwear company Karmaloop Inc. filed for Chapter 11 bankruptcy Monday.
Meanwhile, rapper Kanye West and hip-hop entrepreneur Dame Dash expressed interest in buying a majority stake of the 15-year-0ld company, said Greg Selkoe, founder and chief executive of Karmaloop.
“I hope people understand that Karmaloop is not going anywhere,” Selkoe said. “We had a business that was being held back by the debt and it didn’t seem that we had any other solutions.”
Selkoe, who earned a master’s degree in public policy from Harvard’s Kennedy School of Government, founded Karmaloop from the basement of his parents’ Jamaica Plain home in 2000. Karmaloop.com became known as a go-to online boutique for urban streetwear, primarily for men ages 18 to 35.
But Selkoe’s attempts to parlay that success into more than a dozen other e-commerce sites and side businesses ultimately failed and weighed down the company. Several sites that Karmaloop launched, including Monark Box, Boylston Trading, and the female-focused Miss KL, were shut down. The company also pulled the plug on an unsuccessful TV channel.
“We tried to do too many things,” Selkoe said. “We launched too many different sites in too short of a period of time.”
The bankruptcy filing listed $10 million to $50 million in assets and $100 million to $500 million in liabilities. The company owes Insight Venture Partners of New York $8 million and nearly $1 million to Google Inc., among Karmaloop’s biggest creditors.
In addition, dozens of vendors on the company’s marketplace website Kazbah have complained that Karmaloop is often months behind on payments. Consumers pay Karmaloop for the products, which are then shipped from the vendors. The company takes a percentage before passing on the sales.
Selkoe sent a colorful e-mail to vendors last year, saying cash was tight.
“We’re going to be paying people on a weekly basis,” Selkoe said Monday. “It’s a huge step in the right direction.”
In an interview last year, Selkoe said sales had reached $165 million in 2013. Sales for 2014 were about $100 million, he said Monday.
In the bankruptcy filing, Karmaloop said Comvest Partners of Florida and other lenders provided a loan commitment of up to $30.8 million to support a restructuring under the bankruptcy code.
Selkoe said Karmaloop.com, which has more than 4 million monthly unique visitors, will continue to operate. So will its European website StreetAmmo, its off-price members-only PLNDR division, and the marketplace Kazbah.
He said several high-profile buyers, including West and Dash, have expressed a desire to buy the company and keep him in place as chief executive when the business emerges from bankruptcy.