News hit the Internet yesterday that after 15 years in business, online streetwear retailer Karmaloop could be facing bankruptcy. According to the New York Post, Karmaloop CEO Greg Selkoe is in talks with a private-equity firm to “pay off a portion of the company’s secured debt while adding $10 million in working capital to the business.” To get to the bottom of the rumors. Four Pins spoke with Selkoe about exactly what is going down and about the future of Karmaloop.
Karmaloop recently shut down its other sites, including Bolyston Trading and miss KL. “When we closed those businesses down, we laid off a huge amount of people,” Selkoe told Four Pins. “But that was already a year ago. The staff’s the same. We’re not laying off staff or anything like that.” Shutting down the sites resulted in an increase in the company’s debt, and Selkoe says that they have been trying to find ways to deal with it. “I wanted to find some investors and money to get rid of the debt. But the fact is investors don’t like putting money to pay down debt. A lot of people say they love our business and want to be part of it, but we have to get rid of the debt. So we had to bite the bullet and do a restructuring.”
Selkoe calls the plan to find investor and the restructuring “bankruptcy light” and apologized to consumers who have experienced delays in shipments because of Karmaloop’s situation. “I feel terrible that there were held orders and delays. I got guarantees from the bank that 100% of the customers who had order issues are going to be taken care of. We’re going to make it up to those people who had issues. We’ve been doing this for 15 years, I hope people won’t judge us by one hiccup.”