The starting bid for Karmaloop Inc. could be as low as $13 million, according to court papers related to the bankruptcy case.
Karmaloop, an e-commerce company that sells men’s and women’s streetwear, filed for bankruptcy last week with a plan to sell the business in an auction. The Boston company said it was weighed down by more than $100 million in debt from ill-fated business ventures. Karmaloop said its sales declined to $80 million last year, down from $120 million in 2013. The bankruptcy filing also listed assets of $10 million to $50 million.
A group of Karmaloop’s senior lenders, led by Comvest Capital, plan to offer the initial bid, known as the “stalking horse.” Frank A. Segall, a lawyer for Karmaloop, previously said Comvest would place a modest bid to encourage other parties to participate. Documents indicate Comvest will offer to forgive $13 million in debt Karmaloop owes the company in lieu of cash.
Prior to the bankruptcy, Karmaloop hired the Boston financial advisory firm Consensus Advisors to search for potential buyers. Consensus reached out to more than 150 investors and were unable to find a buyer.
Segall said Karmaloop has been in talks with several interested parties since it filed for bankruptcy. Despite rumors, rap mogul Kanye West and entrepreneur Dame Dash have not purchased the company or made a formal offer, he said.
Karmaloop asked the court to set an auction date for May 19.
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