Sugarfina has filed for Chapter 11 bankruptcy protection and will close six locations immediately, according to court documents seen by The Wall Street Journal. Additionally, the company has received a $13 million lead offer from holding company Candy Cube Holdings in preparation for a bankruptcy auction.
Sugarfina had operated without any funded debt until recently, but the retailer projected that it would need to keep raising money and amassed more than $22.4 million in short-term debt by early 2019, according to the court filing. The company began soliciting potential transactions in June but concluded that it couldn’t complete a deal outside of bankruptcy court. The process is expected to wrap up by November.
“Like many retail brands, Sugarfina has been negatively impacted by a challenging retail environment, particularly in malls where many of our boutiques are located,” said Sugarfina co-founders Josh Resnick and Rosie O’Neill in a statement. “After careful review of a wide range of available options, we determined that an organized restructuring of the company is in the best interests of all parties, including our valued customers, partners and employees.”
Sugarfina had been expanding its brand globally prior to its bankruptcy filing. The retailer opened its first location in Hong Kong in 2018, and in May 2019 Sugarfina signed a deal with GIN Group to open 26 boutiques in Mexico over the next five years.