A month after suddenly announcing its shutdown on June 13, Geek Chic has filed for Chapter 7 bankruptcy. The bespoke furniture maker filed for bankruptcy protection on July 10. Chapter 7 bankruptcy involves a total liquidation of assets to satisfy obligations to creditors. Attorney James W. Shafer filed on behalf of the Everett, Washington company in the Western District of Washington State.
Big Debt, Little Assets
In the filing, the company states that it has a total of $1,463,454.87 in assets and $7,563,052.00 in unsecured claims against it. Geek Chic’s financial cupboard was astonishingly bare, with a total of $261 before depositing two refund checks. One was from specialty toolmaker Richelieu America for $669.87 while the other came from Gen Con LLC. This larger check, for $13,000, was for booth space at the upcoming convention in Indianapolis. The timing of this second check could prove to be interesting, as Geek Chiq was still accepting payments from customers right up to its date of closure. A total of $33,000 in “Manufactured Furniture” is listed among inventory on hand along with $170,000 in hardwoods and other raw materials. Partially completed furniture is also listed along with $100,000 in board games.
These board games are likely inventory from the recently-acquired Crash Games. The publisher of games such as Yardmaster and Council of Verona was acquired in February 2016. Its founder, Patrick Nickell, had previously used Kickstarter crowd funding to produce his products and had announced plans for six more products that year. Geek Chic filed suit against him earlier this year alleging that Nickell withheld information regarding $350,000 in debt owed by Crash Games.
For its part, Geek Chic had been operating at a net loss, reporting a $1.2M deficit for 2015. That year, it reported a gross revenue (before deductions and expenses) of almost $43,000. And, in 2016, gross revenue reached $2.29M. The first half of 2017 looked promising with $884,000 on the books.
Fantasy Author Patrick Rothfuss Among Largest Creditors
Along with numerous suppliers and service providers, three names top the list of unsecured creditors. Owner Robert Gifford lists $2.2M in loans to the company while $4.4M is owed to an investor named Peter Bemis. New York Times Bestselling Author Patrick Rothfuss is the third largest holder. The filing shows that the author of The Name of the Wind, holds $750,000 of debt.
This is unsecured debt. It puts the investors in the same category as the customers who paid deposits for their furniture. Many of the lumber companies listed as creditors have already repossessed hardwood bought on credit. Of the $1.4M listed as property and assets, less than $14,000 is in cash so the likely outcome is that very little money — if any — will actually be returned.
Furniture in your future?
The case is listed as 17-13072-MLB and, according to one site covering court filings, the first hearing held by the court-appointed trustee will be August 15. This will be a “341 meeting” outside of the court where the trustee verifies the bankruptcy petition and creditors are able to ask questions with the petitioner (Geek Chic) being under oath.
Geek Chic can be considered to be the “founder” of the custom gaming furniture industry. But, it is clearly not the only player. Already, one of its competitors has purchased the term “geek chic” in Google “AdWords” which means that it appears at the top of a search for that term. Other, similar, companies have cropped up across the country in the past few years.
Quality and cost will no doubt vary, but potential customers are well advised to remember a key lesson from Geek Chic’s demise. Custom manufacturing requires customers to make a down payment. Using a credit card instead of a check or debit card provides protection against non-delivery. Credit cards enable the recovery of funds. Rules vary by state and card provider.
The full court petition for bankruptcy can be downloaded here (PDF): Geek Chic Bankruptcy