E-commerce technology company Boxed has executed the sale of its Spresso software business by initiating voluntary proceedings under Chapter 11 of the US Bankruptcy Code.
Proceedings were recently filed by Boxed and its four affiliated companies in the US Bankruptcy Court for the District of Delaware.
This decision to seek Chapter 11 protection was agreed by the company’s board of directors.
The company is selling its Spresso software business to its first-lien-secured lenders. However, Boxed will continue to streamline operations for this business.
The firm has been making efforts to enhance its financial structure. A forbearance agreement was settled between the firm and its first lien-secured lenders, considering it as an interim solution to save the business.
Boxed has also decided to close its retail e-commerce operations in the upcoming weeks, in response to the challenging business environment.
Boxed CEO and co-founder Chieh Huang said: “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. Looking to the future, we are incredibly excited to watch the Spresso business continue under new ownership.
“I am immensely grateful for each and every team member throughout the past decade who has contributed to the journey of Boxed.”
Boxed aims to protect its near-future operations and cover required administrative expenses by initiating Chapter 11 and retrieving its cash collateral.
This will support the transitioning of the Spresso business to a separate legal entity which will continue to work as a going concern, without causing any disruption in the activities of its customers.
Boxed has also filed some customary motions with the bankruptcy court for better transitioning of operations, with final approval expected within a few days of the case’s filing.
Freshfields Bruckhaus Deringer and Potter Anderson & Corroon are the legal advisors for this transaction. The financial advisor is FT Consulting and the investment banker is Solomon Partners Securities.