Once a rising technology star in the fashion and retail sector, CaaStle now finds itself embroiled in significant litigation. The company is grappling with deep financial woes. The tech company can’t seem to produce consistent or believable statements regarding its money woes. Now, it finds itself on the wrong end of lawsuits from its P180, the investment vehicle it deployed, and EXP Topco, an apparel company. These developments have led to speculation about whether CaaStle has been operating in good faith or if the company’s time is running out.
P180 claims CaaStle has harmed it by more than $58 million. The narrow investment vehicle is designed to recoup its investment. It wants to end its contract with CaaStle and untangle the corporate relationship between the two. This lawsuit is the latest in an ongoing and serious escalation of CaaStle’s legal woes as it teeters on the edge of bankruptcy.
Topco’s lawsuit is the latest twist in an emerging and often bizarre crisis. The apparel company accuses CaaStle of not living up to its responsibilities years after the two parties agreed to a settlement out of court for copyright infringement. This failure to pay has caused EXP Topco to become quite frustrated, adding to CaaStle’s already troubled predicament.
In a further series of allegations and mishaps, CaaStle’s founder, Hunsicker, has stepped down from her seat on the board. She resigned as CEO. This happened just days after the company revealed it was conducting an investigation into claims of financial wrongdoing by its CEO. The board subsequently acknowledged that CaaStle’s fiscal situation was in extreme crisis, forcing employee furloughs in April.
CaaStle had recently raised $2.7 million in financing to help support its bankruptcy proceedings. That’s a huge signal of the depth of the company’s financial woes. If ultimately confirmed, the loss of $530 million would make it one of the largest cases of this nature in recent history.
Before these allegations came to light, a former employee described the atmosphere at CaaStle as toxic. “I think everyone kind of laughed that off and was like, ‘Oh, we don’t make any money probably,’” they said. Even an ex-Walmart employee was shocked at what he saw. “I don’t think anybody saw it coming,” they said, resonating disappointment that ran through the company when news of fiscal troubles broke.
Yet in the midst of these challenges, CaaStle has not been forthcoming with its impacted workers as to the company’s financial viability. One former employee stated they could not recall receiving updates on the company’s financial situation, which raises concerns about internal communication during critical times.
“True to life, nothing about CaaStle was true,” claims P180 in its lawsuit against the company, driving home the seriousness of its allegations.
In fact, the narrative on CaaStle just continues to change. Axios was the first out of the gate to report on the company’s internal chaos, and TechCrunch has extensively covered the company’s mounting legal challenges.
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