Kanye West isn’t Karmaloop’s white knight after all.
Despite claims that the hip-hop star was planning to purchase the bankrupt online streetwear retailer, Karmaloop was sold to Comvest Partners and CapX Partners for $13 million during a proceeding in U.S. Bankruptcy Court for the District of Delaware on Thursday.
Comvest and CapX were the stalking horse bidders for the 15-year-old company and previously provided debtor-in-possession financing to support the bankruptcy case and sale process. Comvest and CapX’s winning bid for substantially all of the assets — Karmlaloop.com, PLNDR, Kazbah and Karmaloop Europe — was approved and is expected to close in early June.
Karmaloop founder and chief executive officer Greg Selkoe will step down as ceo but will remain with the company in an advisory role, according to Comvest and CapX Partners. A new ceo is expected to be named next week.
Comvest partner Robert O’Sullivan, said, “We’ve been involved with the company since 2012 and are big believers in the brand’s power and potential. As such, we’re delighted that the process now allows us to deepen our relationship with the brand. We’ve already invested nearly $3 million in DIP financing during the bankruptcy process, and are investing millions more as part of the acquisition. With ample capital for growth and a debt-free balance sheet, Karmaloop is going to have a fantastic future.”
According to Comvest and CapX, the restructuring and new funding will eliminate existing debt that was incurred to support the launch of four new business divisions and the development of television content between 2011 and 2013. These initiatives “proved to be economically unviable and the debt that remained as a vestige of these past efforts hindered working capital for the core business,” the company said.
Karmaloop.com has close to four million unique visitors each month, Comvest and CapX said.
The company filed a voluntary Chapter 11 petition for bankruptcy in a Delaware court in March, stating that it had between $10 million and $50 million in assets and between $100 million and $500 million in liabilities.