After Failing to Find Buyer, Boxed Declares Bankruptcy

Publicly traded online retailer Boxed declared chapter 11 bankruptcy yesterday, just months after the company announced that it was “exploring strategic alternatives” such as a sale of the business.

“This was an incredibly difficult decision, and one that we reached only after carefully evaluating and exhausting all available options,” Chieh Huang, Co-Founder and CEO of Boxed 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.”

Boxed went public in December 2021 after merging with special purpose acquisition company (SPAC) Seven Oaks.

The filing includes the assets of Boxed as well as its subsidiaries Ashbrook Commerce Solutions LLC, Boxed, LLC, Boxed Max LLC and Jubilant LLC. According to documentation filed by Boxed as part of the bankruptcy process, the company has $102.6 million in assets and $190.4 million in liabilities with its largest creditors holding unsecured claims including Bracebridge Capital ($32.4 million), Brigade Capital Management ($21.9 million), Silicon Valley Bank ($5 million), and global CPG companies including Kelloggs, Procter & Gamble and PepsiCo.

Founded in 2013, Boxed offers “bulk pantry consumables” via ecommerce as well as on-demand grocery delivery in New York. The company also owns Spresso, an e-commerce platform for retailers, DTC manufacturers and marketplace operators. According to bankruptcy filings, Boxed is currently negotiating a sale of Spresso to a lien lender, a deal that will include the intellectual property, rights and assets associated with the business.

“Looking to the future, we are incredibly excited to watch the Spresso business continue under new ownership,” Huang said.

Boxed is also selling its remaining retail business, a process that began on March 30 when the company entered into a purchase agreement for inventory held at its Dallas and Las Vegas fulfillment centers, which will cease operations as of today. Boxed’s Union, New Jersey warehouse will continue to fulfill customer orders for the company’s remaining inventory.

In an email sent to brands today, Boxed president of ecommerce Alison Weick stated the company will not be accepting any new orders as it depletes existing inventory. Any outstanding invoices to vendors are classified as “pre-petition” claims with vendors currently being sent “proof-of-claim” forms that can be utilized to try to recoup any outstanding balances.

“As part of our efforts to explore strategic alternatives, we have determined it is necessary to wind down our retail e-commerce operations in an orderly way,” Weick wrote. “Although this is not the outcome we had hoped for, we want to thank you for your support over the years.”

Boxed has faced ongoing struggles with its finances, with its stock trading closing at 19 cents a share on Friday, down from its peak of $13.70 in December 2021. Though the company had entered into a Forbearance Agreement with lenders as an interim measure, and raised $20 million in additional capital earlier this year, ultimately the board voted unanimously to file for Chapter 11 last week.

On its most recent quarterly earnings call last November, the company reported net revenue of $41.7 million, a decrease of 15%, over the prior year period, of which 99.8% was from retail net revenue with less than one percent from software and services net revenue. Though Boxed was able to drive retail gross profit to $4.9 million, an 88.8% increase as compared to the prior year period, net loss was $26.4 million, roughly four and half times higher than in the prior year period.

Brands began reporting issues with Boxed to NOSH last week. Bone broth brand Bare Bones told NOSH that while its shipment was delivered successfully to the New Jersey warehouse, its order to the Texas location was rescheduled for delivery multiple times. Meanwhile, its Las Vegas delivery was turned away entirely with the driver informed the warehouse was closing, unbeknownst to Bare Bones, the company’s co-founder and CEO Katherine Harvey said.

When she tried to email the broth company’s five Boxed contacts, all five emails bounced back as no longer being in service. Though a Boxed representative then told Bare Bones that all March POs had been canceled on March 14, Bare Bones said Boxed staff had reached out several times in March asking about delivery dates.