Boxed, which describes itself as “an e-commerce technology company that provides bulk pantry consumables to business and household customers,” said yesterday that it will wind down its retail business and sell its Spresso software business to its first lien secured lenders as it “initiated voluntary proceedings under Chapter 11 of the U.S. Bankruptcy Code.”
Spresso business customers are not anticipated to see any disruption of service throughout the sale process, the company said.
Earlier this year, Boxed was able to secure what essentially was a $10 million bridge loan in order to keep its business going while seeking a sale of the company. However, the company said, “in line with its efforts to counter the challenging business environment, the Company made the difficult yet necessary decision to wind down its retail e-commerce operations over the next several weeks. The Company’s Board of Directors has unanimously determined that seeking Chapter 11 protection is the most appropriate path forward.”
“This was an incredibly difficult decision, and one that we reached only after carefully evaluating and exhausting all available options. 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,” said Chieh Huang, co-founder/CEO of Boxed.
Axios notes in its coverage that Boxed is just the latest company – there have been at least nine to this point – “that’s gone public via merging with a special purpose acquisition company to file for bankruptcy.” The story points out that “while the SPAC mania attempted to reverse the two-decade-long trend of companies taking longer to go public, it’s now shown that not all companies are fit to be public.
“In addition to bankruptcies, a number of companies that merged with SPACs have since been taken private, often at prices smaller than what they were worth when first listed.”
The Information writes that “it’s the latest sign of pain among grocery delivery companies. Rapid delivery startups including Fridge No More shuttered last year as venture funding dried up, and grocery delivery startup Good Eggs recently cut its valuation 94% in an emergency round of funding. Larger players like Instacart and DoorDash have come to dominate much of the online grocery market, and Instacart recently raised its internal stock price on the heels of a rally in publicly traded competitors.”
KC’s View:
It is a sad story whenever companies are unable to stay in business because of market forces that work against them. It was just a couple of months ago that Chieh Huang – a real gentleman, in my experience – spent some time with me on MNB to chat about Boxed and the broader economic climate. You can see that two-part conversation here and here.
The moment is proving to be a tough one for a number of e-commerce companies, as demand lessens and financing becomes both more expensive and harder to find. The companies that make it, I think, will be the ones that are able to integrate themselves into a retailer’s broader operations, supporting the company’s overall value proposition and bringing them closer to shoppers’ needs and desires.
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