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No More "Dog Dung Vacuums" As SkyMall Files For Bankruptcy

In what will likely end the hopes and dreams of many air travellers hoping to pick up the latest crystal-encrusted iphone cufflinks, upright sleeper, hiccup stick, or dog dung vacuum; Commercial Bankruptcy Investor reports that the companies behind the SkyMall catalogs has filed for Chapter 11 bankruptcy protection. This news comes as Xhibit - SkyMall's parent company - sees its stock price collapse and December's news that Southwest Airlines (which accounted for at least 7% of SkyMall's sales) would no longer distribute the catalogs. On the bright side, any liquidation is great for those looking to pick up a Diamond Jubilee Queen and Corgi statuette or a Doll-House styled cat litter...

 

As Commercial Bankruptcy Investor reports,

Recent SEC filings by Xhibit Corp., the parent company of SkyMall, may provide some clues as to the problems that the company is facing.  Last week, the company made the following disclosure in a Form 8-K filing:

 

On January 16, 2015, Xhibit Corp. (“Xhibit” or the “Company”), the parent corporation of SkyMall, LLC, announced that it suspended operation of SkyMall’s retail catalog business, which represents a significant portion of the Company’s current consolidated revenue. The Company currently intends to continue SkyMall’s other business operations, including its online retail business, as it explores available strategic alternatives for the SkyMall business. In conjunction with the reduction in operations, the Company terminated approximately 31% of its workforce, the bulk of whom were employed in the Company’s call center operations. The Company cannot predict the impact on sales of the suspension of catalog operations, because a significant portion of catalog generated merchandise sales is believed to be placed by consumers through SkyMall’s website and these sales are not separately tracked. The Company believes that the near-term impact on merchandise sales will be substantial, and will likely increase as the duration of the suspension continues.

 

The Company determined that it lacked sufficient available capital resources to continue implementing its business transformation plan which had been underway since early 2014, and that no viable debt or equity financing currently is available on terms acceptable to the Company.

 

 

The Company has engaged CohnReznick Capital Market Securities, LLC to explore a possible sale and other strategic options for the Company. The Company is actively assessing its strategic options, including a potential filing under Chapter 11 of the Federal Bankruptcy Code.

 

In addition, the company also disclosed in December 2014 that Southwest Airlines would no longer distribute SkyMall catalogs on their flights.  Southwest had accounted for seven percent of SkyMall’s “net merchandise sales” but the “actual negative impact of removing the in-flight catalog from Southwest flights on SkyMall’s net merchandise sales could be greater than 7%” according to Xhibit.

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It might be time to look out for fire-sales of the following must-have items...

 

See more here...