Shawn Nelson, the $1 million winner of The Rebel Billionaire, calls himself “the Man with the Sac” after the company he founded, LoveSac. He may need a new nickname, however, because “his Salt Lake City-based company, its franchising arm and two affiliates have filed for Chapter 11 bankruptcy,” the Salt Lake City Tribune reports.
This doesn’t necessarily mean the end of the company, however. “Financially troubled companies file Chapter 11 bankruptcy to ease their debt, come up with a reorganization plan and a chance to start fresh,” according to the paper. “Unlike a Chapter 7 bankruptcy, companies are not required to sell off all assets to pay creditors.”
Although the media couldn’t get a comment from him, Shawn explains why the company is hurting financially on his blog:
“To all of those who may be hurt by the actions of LoveSac, I am truly sorry. Never would we have arrived at this hard place if we would only have had a better Christmas Season–something that none of could have forseen. Now, we endeavor to reconstruct, in order to preseve some value for those who may be owed….there was simply no other option. There was just nothing left. That’s all there is to it.
To all of those who have supported us in any way at any time, and for those who still do today, thank you. We are working tirelessly to go forward and build something that we can be proud of and that can somehow, someday repay (one way or another) all of those who have given so much, and who are willing and able to ride out this storm. What else is there to do? To walk away would be to hurt even more people, even more deeply. We will be a stronger, more capable company for this, and, unfortunately, there was no other way.”
Tangentially, the paper reports that, last year, LoveSac was sued by “a former employee who claimed the company discriminated against him because he was not a member of The Church of Jesus Christ of Latter-day Saints.” He “alleged that Nelson humiliated him in front of staffers for drinking on a company trip.” They settled out of court.