San Francisco-based Wag! Group Co., once a high-flyer in the tech-driven pet services industry, has declared bankruptcy with plans for a strategic restructuring under the protection of Chapter 11, the company has announced. The business that used to be valued at $650 million faced substantial losses and heavy debts, culminating in the decision to reorganize its finances in a deal that will hand over ownership to Retriever LLC, previously a primary secured lender to Wag!.
The market for tech-enabled pet care services that Wag! once dominated has seen significant changes, and despite diversification efforts and the ubiquitous demand for pet care, the company's fortunes have dwindled. Wag!'s valuation dropped from its peak to less than $6 million, with stocks trading at around 12 cents a share, SFGATE reported. The company's chief financial officer Alec Davidian highlighted in a document that, "monthly revenues declined rapidly after March 2020 as a result of the COVID-19 pandemic," and pointed to substantial losses over multiple years.
The reorganization plan entails Retriever LLC taking ownership of Wag! following court approval. The goal is to expedite this process, with Wag! expecting to emerge from Chapter 11 within about 40 days. In preparation, Wag! has obtained debtor-in-possession financing from Retriever LLC, and additional exit financing has been agreed upon to secure a stable post-bankruptcy emergence. "This process enables us to move forward with a clear plan and a strong partner who shares our vision for the future," CEO and Chairman Garrett Smallwood stated in a news release.
The intended financial and operational rebalancing aims to set Wag! on a path toward sustainable growth and long-term success. The availability of liquidity from the DIP financing and ongoing operations is expected to maintain business obligations during the Chapter 11 process. Smallwood's vision sees the company emerging with the resources necessary to achieve its strategic priorities, despite the setbacks faced in recent years.
Details of the Chapter 11 process, including court filings and related materials, are available to the public. Wag! remains confident in the proposed path to stabilization and growth as it looks to navigate through the bankruptcy proceedings and beyond.
