CaaStle hit with multiple lawsuits following fraud allegations
It's been one month since fashion tech company CaaStle told investors that they're likely victims of one of the largest financial frauds in U.S. history, with over $530 million up in smoke.
Now the lawsuits are beginning to fly, and the company is doubling down on its caginess.
Driving the news: CaaStle is being sued for fraud by P180, the fashion brand acquisition platform that was formed to leverage CaaStle's technology.
P180 argues that it never would have done several transactions, including this past January's purchase of apparel company Vince, had it known the truth of CaaStle's business and financials.
The complaint calls out CaaStle co-founder and former CEO Christine Hunsicker, who also was on the P180 board, and also current CaaStle board members George Goldenberg (CaaStle's interim CEO) and JP Singh (a computer science professor at Princeton).
It claims that CaaStle's lies caused P180 to incur debts (some of which weren't memorialized) that would be used to "force an eventual merger" — a concept that Singh would later extol in a video call with CaaStle shareholders.
In a statement to Axios, CaaStle says: "We take issue with some key factual assertions made by P180, we believe the claims are without merit and look forward to vigorously defending our position."
But wait, there's more: CaaStle also is being sued by EXP Topco, which holds the IP for clothing brand Express.
It claims that CaaStle infringed on EXP's trademarks by continuing to offer an Express-branded subscription service after EXP bought the IP.
The two sides reached a settlement, but CaaStle never paid. Moreover, the settlement was reached after CaaStle knew of the fraud, which allegedly means it never had the funds it had promised.
Coming attractions: There also are rumblings of a possible class action suit against an investment firm that funneled retail investors into CaaStle.
Behind the scenes: CaaStle last week told shareholders, via an unsigned letter, that it had hired a restructuring expert named Monica Blacker of Force 10 Partners as an independent director.
It was the only investor communication since April 7, when CaaStle claimed to have secured $2.75 million in bridge financing that would be used, in part, to plan for Chapter 11 process.
There is no mention of Chapter 11 in the Blacker announcement. Nor did the company address it when asked by Axios, although a source says it may be close to hiring financial advisers.
Two investors tell Axios that they've asked questions of CaaStle's board, via an email address designed for this purpose, but haven't received replies. The company says it's been "addressing shareholder inquiries on a regular basis."
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Miami Herald
44 minutes ago
- Miami Herald
After Chapter 11 bankruptcy, fast-food chain faces liquidation
Chicken has become a major battleground in the fast food space. You have your dedicated chicken chains like KFC and Chick-fil-A, and there's also Popeye's, Zaxby's, Raising Cane's, and countless others devoted specifically to selling chicken. You also have McDonald's Burger King, and Wendy's, which have all made chicken, a major part of the menu. Related: Popular Latin American chain files bankruptcy, closes restaurants That makes it incredibly hard to break into the space. Maybe you can offer a better product but does that difference matter when so many other chains, with so many locations are your competition? In some ways, fried chicken has become like craft beer. There are a lot of people who are very passionate about it that want to enter the space, but it's nearly impossible to differentiate yourself. Trying to market your chicken chain as superior to others seems like a really challenging idea, That's exactly what Sticky's has tried to do boldly using the marketing line "the best damn chicken finger you have ever tasted." Don't miss the move: Subscribe to TheStreet's free daily newsletter The company tried to justify that boast on its website. "Sticky's was created out of a love for chicken fingers and the desire to think outside of the box. Our founders realized that there were a lot of New Yorkers who really loved chicken fingers but didn't have a great place to get them; and thus, Sticky's was born! Our mission is to create the best damn experience through the comfort of chicken fingers in a fun, inclusive space," it shared. Image source: Getty Images While it opened with noble intentions (or at least lofty goals), Sticky's was not able to deliver. The chain has been in Chapter 11 bankruptcy for almost a year. During its period of court protection, the company closed three locations and a ghost kitchen. At the time of its filing with U.S. Bankruptcy Court for the District of Delaware, the company reported $500,000-$1 million in assets and $1 to $10 million in liabilities, with the largest creditor being distributor U.S. Foods. It seemed in late-April that the chain had found a lifeline. More Food & Dining: Popular Mexican chain closing all restaurants, no bankruptcyIconic Warren Buffett candy store suddenly closing after 30 yearsWalmart's Sam's Club makes a Costco-style food court changePopular Trader Joe's wine brand has bad news, making harsh choice "Sticky's won a Delaware bankruptcy judge's tentative permission Tuesday to sign a contract to sell its assets to an investment fund for $2 million after surging poultry prices and New York City's congestion pricing program imperiled the company's Chapter 11 turnaround plan," Law360 reported on April 30. That court order is now under scrutiny which could lead to the company being liquidated. Harker Palmer Investors LLC tried to defend its offer in a June 3 court filing in the US Bankruptcy Court for the District of Delaware. The company sought to answer an objection from a Justice Department bankruptcy watchdog objection to the $2 million deal. It argued that the US Trustee's legal arguments are "unsupported" and that no creditors - including landlords and supplier US Foods - oppose the revised proposa," Bloomberg Law first reported. If the offer is not approved, Harker Palmer's lawyers argued, the fried chicken chain will have to be liquidated. "If the Modified Plan is not confirmed, conversion to Chapter 7 will follow resulting in no recovery to any creditors," the firm said in the filing. Chapter 7 would involve a trustee-supervised liquidation process. Related: Subway owner makes major billion-dollar fast food acquisition Sticky's, which has also faced a lawsuit over its name, built its business on the idea that it offers higher-quality chicken fingers than its rivals. "At Sticky's we use the finest ingredients, including fresh never frozen antibiotic-free chicken. We take great pride in what we do and what we serve. With a selection of over 18 sauces made in house, it is a labor of love. We believe this process is necessary to serve our customers 'The Best Damn Chicken,' it posted on its website. The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
an hour ago
Michaels completes acquisition of Joann's intellectual property, fan-favorite labels
NEW YORK -- Craft labels from the now-shuttered fabrics seller Joann are making their way to a new home: Michaels. The Michaels Companies announced on Thursday that it had completed its purchase of Joann's intellectual property and private label brands — in an acquisition that arrives as the Texas-based arts and crafting chain works to expand its own fabric, sewing and yarn offerings. 'We're honored to have the opportunity to welcome JOANN customers into our creative community and are committed to delivering the selection, value, and inspiration they are looking for at Michaels,' Michaels CEO David Boone said in a statement. The deal, he added, allows the company to better 'respond to rising demand' among both new and existing customers. Financial terms of the acquisition were not disclosed. The Associated Press reached out to Michaels for further information on Friday. With roots dating back to a single Ohio storefront in 1943, Joann had grown into a destination for generations of sewers, quilters, knitters and lovers of other crafts for more than 80 years. But more recently, operational challenges continued to pile up — with the retailer pointing to sluggish consumer demand, inventory shortages and rising competition. Joann announced it would be going out of business back in February, just one month after filing for Chapter 11 bankruptcy protection for the second time within a year. At the time, the company said financial services company GA Group, together with Joann's term lenders, had been selected as the winning bidder to 'acquire substantially all of Joann's assets' and conduct going-out-of-business sales at all store locations. Michaels on Thursday said that its purchase of Joann's IP and private brands included the acquisition of 'Big Twist' yarns, which had become a staple in Joann stores over the years. Those 'Big Twist' labels are now being developed as part of Michaels' portfolio — and will be available in-stores and online later this year, the company said. In the meantime, Michaels has also dedicated a landing page to welcome former Joann customers online. And as part of its overall expansion into fabrics, Michaels said on Thursday that its adding more than 600 new products from new and existing brands — including quilting supplies and fabrics, specialty threads, sewing machines and more. Michaels, founded in 1973, currently operates 1,300 stores across 49 U.S. states and Canada. Its parent company also owns Artistree, a framing merchandise manufacturer.
Hamilton Spectator
an hour ago
- Hamilton Spectator
Michaels completes acquisition of Joann's intellectual property and fan-favorite labels
NEW YORK (AP) — Craft labels from the now-shuttered fabrics seller Joann are making their way to a new home: Michaels. The Michaels Companies announced on Thursday that it had completed its purchase of Joann's intellectual property and private label brands — in an acquisition that arrives as the Texas-based arts and crafting chain works to expand its own fabric, sewing and yarn offerings. 'We're honored to have the opportunity to welcome JOANN customers into our creative community and are committed to delivering the selection, value, and inspiration they are looking for at Michaels,' Michaels CEO David Boone said in a statement. The deal, he added, allows the company to better 'respond to rising demand' among both new and existing customers. Financial terms of the acquisition were not disclosed. The Associated Press reached out to Michaels for further information on Friday. With roots dating back to a single Ohio storefront in 1943 , Joann had grown into a destination for generations of sewers, quilters, knitters and lovers of other crafts for more than 80 years. But more recently, operational challenges continued to pile up — with the retailer pointing to sluggish consumer demand, inventory shortages and rising competition. Joann announced it would be going out of business back in February, just one month after filing for Chapter 11 bankruptcy protection for the second time within a year. At the time, the company said financial services company GA Group, together with Joann's term lenders, had been selected as the winning bidder to 'acquire substantially all of Joann's assets' and conduct going-out-of-business sales at all store locations. Michaels on Thursday said that its purchase of Joann's IP and private brands included the acquisition of 'Big Twist' yarns, which had become a staple in Joann stores over the years. Those 'Big Twist' labels are now being developed as part of Michaels' portfolio — and will be available in-stores and online later this year, the company said. In the meantime, Michaels has also dedicated a landing page to welcome former Joann customers online. And as part of its overall expansion into fabrics, Michaels said on Thursday that its adding more than 600 new products from new and existing brands — including quilting supplies and fabrics, specialty threads, sewing machines and more. Michaels, founded in 1973, currently operates 1,300 stores across 49 U.S. states and Canada. Its parent company also owns Artistree, a framing merchandise manufacturer.
