Amazon-Seller Acquirer Benitago Files For Bankruptcy
Benitago Group, a New York-based company that acquires and incubates Amazon third-party brands, has filed for bankruptcy less than two…
Benitago Group, a New York-based company that acquires and incubates Amazon third-party brands, has filed for bankruptcy less than two years after raising nearly $400mn in equity and debt funding. The company filed for Chapter 11 bankruptcy in a New York court on Wednesday, listing both assets and liabilities of $50mn to $100mn.
Benitago was founded in 2016 by Benedict Dohmen and Santiago Nestares, two Dartmouth College students. They began with a posture-support product sold on Amazon, and, over the years, their company morphed into an Amazon-seller aggregator offering nearly 1,000 products.
Benitago’s growth was fuelled by $380mn in equity and debt funding. It was among a cohort of Amazon-seller acquirers fuelled by billions of dollars in venture funding during the “free money” era; investors had excess capital chasing too few deals. However, times have become tougher, and the Amazon-seller roll-up business is no longer booming;
- The effects of the COVID-19 pandemic gradually subsided over the years and shifted consumer preferences. Inflation has eaten into consumer budgets, leading to lower sales for non-essential items. Venture capitalists now have tight budgets and are unwilling to fund risky business models like Benitago’s.
Benitago blamed its bankruptcy on “a rapid and dramatic reversal of fortune due to macroeconomic forces as the e-commerce sector has shrunk dramatically in the past two years and continues to decline.” The company said it filed for bankruptcy to restructure itself to “reflect this new market reality.”
- Benitago plans to restructure its debt and possibly sell some brands while under bankruptcy. It had just $7.5mn in cash at the time of the filing.
Benitago’s bankruptcy filing showed a long list of secured and unsecured creditors. The latter are mostly Amazon sellers to whom Benitago owes money for acquiring their brands, including a Romanian couple and Chinese firm each owed over $1mn.
Benitago’s biggest secured creditor is CoVenture, an investment management firm owed roughly $85mn. Benitago also owes nearly $10mn to SellersFi (formerly SellersFunding), a New Jersey-based specialist lender for e-commerce businesses.
- Benitago appointed Tom Studebaker of advisory firm Portage Point Partners as its chief restructuring officer. In the meantime, the company will continue to fund some subsidiaries to keep them operating as usual “pending the conclusion of the sale process.”