Fifteen-year-old streetwear e-tailer Karmaloop Inc. on Monday filed a voluntary petition for Chapter 11 bankruptcy court protection in Delaware.

This story first appeared in the March 24, 2015 issue of WWD. Subscribe Today.

The company said it has a $3 million investment from Comvest Partners, along with co-lender CapX Partners, to support the restructuring. The current plan is for the investment, in the form of debtor-in-possession financing, to be converted into equity upon the company’s exit from bankruptcy provided there are no better offers forthcoming in the auction process.

Karmaloop founder and chief executive officer Greg Selkoe said in a telephone interview, “This really is not about a problem with the core business. The [bankruptcy] filing is related to debt from overexpansion in some areas.”

Selkoe emphasized that the core business continues to do well and “is profitable.” He also admitted to having been a “little overambitious” on some of the ventures that didn’t pan out.

According to Selkoe, the company still has its venture with Xiu.com, although fulfillment is still being done out of the U.S. instead of out of a warehouse in China, as once was planned. “The business hasn’t grown into what we thought it would,” Selkoe said.

As for the court auction of the business, Selkoe said there is interest from a few potential buyers.

Karmaloop’s Web site will continue full operations during the bankruptcy, as will its wholly-owned European Web site StreetAmmo, its PLNDR division, the off-price members-only sale section and its Kazbah division.

The site targets young men and women between ages 18 to 35.

The company listed total assets between $10 million to $50 million, and total liabilities between $100 million to $500 million. The top two unsecured creditors are Insight Venture Partners VI and Silicon Valley Bank, with each one being owed $8 million.