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What really went wrong at Loot Crate

Video game loot boxes have come under increased fire as of late; now the company selling real-life loot boxes, Loot Crate, is facing trouble itself. The company announced early on Monday that it's filing for bankruptcy, laying off many of its employees and leaving its future looking mighty uncertain.

Loot Crate CEO Chris Davis explained some of the issues facing the company in a press release.

"We have worked diligently to overcome challenges with our capital structure, along with legacy issues the Company has been struggling with for the past 18 months," Davis said. "We are very pleased with our progress from an operational efficiency standpoint, however, the company still faces liquidity issues."

As part of the bankruptcy filing, Loot Crate — best known for its subscription boxes full of comic book and video game-related gear — is agreeing to sell itself to an entity known as Loot Crate Acquisition LLC. That company is affiliated with Money Chest LLC, which also happens to be fueling Loot Crate's continued existence with $10 million of new financing. So, in essence, not a whole lot will change from the outside looking in. Loot Crate will continue to operate as it normally has — minus its laid off staff — and customers will continue to receive their shipments as scheduled.

What Loot Crate does get the opportunity to do thanks to Chapter 11 bankruptcy, however, is restructure its debt. That should help alleviate some of the "liquidity issues" for the time being, but unless the company can better streamline operations, there's a chance Loot Crate could run into the same problem again somewhere down the line.

In other words, Loot Crate is not dead yet. Announcements of its passing are premature. But the company is definitely not in the best health.

There's no word yet on whether or not laid off employees will be brought back at a later date. Those still working at the company "will continue to be paid as usual," according to Loot Crate.

We'll continue to monitor the situation for any updates.