‘Incredibly difficult decision’ has Boxed filing for Chapter 11

Boxed Inc., owners of Spresso software, has filed for Chapter 11 bankruptcy protection. The company will fund operations and administrative costs while the Chapter 11 process plays out.

Spresso will be sold to lien lenders. Boxed featured a B2C and B2B retail business and an end-to-end ecommerce platform through the Spresso software that allowed consumers to be part of a club without the fees that offered free two-day delivery with orders over $49. Boxed Up loyalty members received free shipping if they spent $19.98. Boxed sold groceries, pantry items, household staples, health and beauty aids, office supplies, private label, and organic and green products. The company will continue to take orders as long as there is inventory.

According to the Chapter 11 filing, Boxed total assets sit at just over $102.5 million, while total debts are just over $190 million.

“This was an incredibly difficult decision and one that we reached only after carefully evaluating and exhausting all available options,” CEO and co-founder Chieh Huang said in a statement. “Although this outcome is not what we worked so hard for, we are thankful to everyone, including our customers, who have supported us along the way. Looking to the future, we are incredibly excited to watch the Spresso business continue under new ownership.”

Related:Boxed lands $20 million in funding

Interesting enough, Silicon Valley Bank, which shocked Wall Street in March after it was taken over by the California Department of Financial Protection and Innovation due to inadequate liquidity and insolvency, is listed among the creditors of Boxed in the Chapter 11 filing. Boxed said it had most of its cash deposits and other liquid assets in Silicon Valley accounts totaling just over $5 million. Bracebridge Capital (over $32 million) and Brigade Capital Management (almost $22 million) were the top two creditors, according to the Chapter 11 filing.

Red flags started to wave in late 2022 when Boxed announced its stock was in danger of being delisted from the New York Stock Exchange. Leadership, however, was optimistic due to anticipated new funding.

“I don’t think the stock price reflects how exciting the current situation is for us,” Huang said in December 2022. “Assuming we get [financing] done … if we’re able to bridge us to profitability using those funds, things get really, really exciting.”

At the time of the funding announcement, Huang said the company’s B2B business, where orders average $300 and carry higher margins than B2C sales, had rebounded sharply since a downturn during the pandemic.

Related:Boxed sees potential in consumer grocery delivery

That new funding was secured in early 2023 in the form of $20 million, but it was uncertain if the company was going to gun for profitability or attempt to sell. Boxed received $10 million from and unknown lender by entering into a second lien secured term loan facility. Another $10 million was linked to the completion of certain milestones during the sale of the company.

“This new financing will provide greater flexibility for us to continue to execute on our strategic vision and the strategic alternatives process,” said Huang. “We value our existing relationships with funds and accounts managed by BlackRock and the lender and are excited to continue to work closely with them.”

Back in 2018, Kroger offered to buy Boxed for $400 million, but Huang and company nixed the deal. Amazon, Target and Costco also expressed interest in the company that started in 2013.