Boxed, the once high-flying online answer to price clubs like Costco, BJ’s Wholesale and Sam’s Club, is considering a bankruptcy filing if it can’t find a buyer as its struggles continue 15 months after going public in a much-anticipated SPAC deal.
At the same time, Boxed said it plans to lay off about 25% of its 136 employees, in a required notice posted by the U.S. Department of Labor, according to Crain’s New York Business. In 2018, Boxed rejected a $400 million buyout offer from Kroger, instead trusting to its own upward trajectory. It was also courted at the time by Amazon, Target and Costco.
The company raised $240 million prior to its December 2021 IPO, $110 million coming in a 2018 round led by Japan’s Aeon Group. Just prior to the IPO, Boxed expanded into fresh, on-demand grocery delivery with the acquisition of New York-based MaxDelivery. Back in 2017, it had even developed its own robotic cart system to automate order fulfillment.
In the recent 8k filing with the Securities and Exchange Commission, Boxed said it is soliciting proposals from potential acquirers and weighing all “strategic alternative” options, up to and including a bankruptcy filing. Its financial advisor is Solomon Partners and Cowen.
On top of that, Boxed said in the filing it had most of its cash “and other liquid instruments” tied up in the colossally failed Silicon Valley Bank, as part of the terms of a 2014 loan with the institution, now in the hands of the FDIC.
In early January, Boxed said it was pursuing a buyer and confident of landing sufficient capital to continue operations within 45 days, a window which has now closed.
According to the new SEC filing, Boxed is required to provider its lender BlackRock a debtor-in-possession budget and financing facility, and a $5 million pre-payment plus interest and fees, as part of a March 1 forbearance agreement.
The company has also struck retention agreements with founder and CEO Chieh Huang, CFO Mark Zimowski and president of ecommerce Alison Weick, equal to a third of their salaries, “in order to retain critical talent in an effort to maximize value during a period of significant volatility,” the filing stated.
For the third quarter of 2022, Boxed posted net revenue of $41.7 million, down 15%, and an unadjusted net loss of $26.4 million, compared to $5.9 million in the prior year’s Q3. As part of its recent 8k filing, the company said it expected its 2022 annual report to be delayed.