CaaStle Files for Chapter 7 Bankruptcy, Setting Up Liquidation
The scandal plagued rental pioneer filed for Chapter 7 bankruptcy in Delaware, setting up a liquidation of the business less than three months after chief executive officer Christine Hunsicker left the company under a cloud.
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The bare-bones filing said the company had $10 million to $50 million in both assets and liabilities and between 200 and 999 creditors.
After what's left of CaaStle is sold off, the filing said there should be funds left over to give to unsecured creditors.
The paperwork was signed by George Goldenberg, a board member who was chief operating officer and took over as interim chief executive officer when Hunsicker left in late March. CaaStle's attorney did not immediately respond to a WWD request for comment Monday.
A letter from the board to shareholders this spring accused Hunsicker of giving investors 'misstated financial statements and falsified audit opinions' and said the company had lost $510 million over the years, almost all of the $520 million in funds it raised. Law enforcement authorities were said to have started investigating the matter.
But the scandal has done more than fell an apparent leader in the still-developing space of fashion rental, it's complicated life for Brendan Hoffman's P180.
The company, founded with Hunsicker and partially owned by CaaStle, looked to invest in brands and then rework their operations, using CaaStle's technology to rent out slow-moving inventory instead of taking steep price cuts.
As an investment thesis, it was novel and led to deals with Elyse Walker, Altuzarra and, most prominently, Vince, which P180 bought a controlling stake of in January.
While Vince is charging ahead with Hoffman at the helm, P180 is trying to pick up the pieces and is taking both CaaStle and Hunsicker to court.
This month, P180 sued Hunsicker, Goldenberg and others under the Racketeering Influenced and Corrupt Organizations Act.
The federal suit said P180 was taken in by 'The Hunsicker Enterprise,' which singled out the former CEO as the 'ringleader of a conspiracy.'
'Hunsicker is a world-class fraudster ranking alongside the likes of Bernie Madoff and Elizabeth Holmes,' the suit said. 'She lied to the world to make it appear that CaaStle was a success, lied specifically to Hoffman about CaaStle and hid CaaStle's financial data from Hoffman. She presented herself as a skillful and successful entrepreneur who built a robust e-commerce business, raised hundreds of millions of dollars for it and commanded a board of notable leaders in corporate governance.'
As soon as allegations started to swirl around Hunsicker, it was clear the matter was headed for court. And now it's there three-times over — before judges in New York state, at the federal level and in bankruptcy court.
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