The online bulk retailer, Boxed.com that had once experienced significant growth during the Covid-19 pandemic, filed for Chapter 11 bankruptcy on April 2, 2023. The company, which was founded in 2013, went public in 2021 after merging with special-purpose acquisition company Seven Oaks Acquisition Corp. and was listed on the New York Stock Exchange. Boxed.com has 250 employees and operates in the e-commerce industry, offering bulk-sized pantry items and fresh grocery delivery services in the New York City area.
The bankruptcy filing came after Boxed.com revealed that it held a majority of its cash deposits and other liquid assets in accounts at the collapsed Silicon Valley Bank. The company managed to move most of its cash out of the bank before filing for bankruptcy. As a result of the news, Boxed.com’s stock price plummeted nearly 50%, and the company now faces the possibility of being delisted from the New York Stock Exchange if it cannot bring its stock price back above $1 on average for at least 30 days.
Boxed.com is currently pursuing the sale of its Software-as-a-Service business, Spresso, as part of its efforts to raise capital. The company intends to fund its near-term operations and cover administrative expenses through access to its cash collateral as it winds down its retail operations. Boxed.com CEO and co-founder Chieh Huang described the decision to file for bankruptcy as “incredibly difficult” and stated that it was reached only after evaluating and exhausting all available options.
As Boxed.com works with financial advisors to identify a buyer for its assets, it plans to negotiate a “stalking horse” bid, which sets a minimum value for the company that other potential bidders would have to surpass during a bankruptcy auction. This type of bid requires a judge’s approval and is commonly used in bankruptcy proceedings. Despite the ongoing bankruptcy process, Boxed.com assures customers that they will not face service disruptions during the sale of its Spresso business to first lien lenders.