Forever 21 parent Authentic Brands filed a lawsuit against payment startup Bolt
- ByStartupStory | April 27, 2022
Bolt Financial Inc., the payments firm best known for its founder’s heated Twitter threads accusing Silicon Valley of being driven by “mob bosses,” is being sued by one of its most well-known clients.
Authentic Brands Group claims that Bolt not only failed to deliver promised technologies, but also that the clothing retailer lost more than $150 million in online sales as a result of Bolt’s integration with Forever 21. According to the complaint, Bolt raised money at increasingly high valuations by “consistently overstating” the scope of its integration with ABG’s brands to give the impression that it had more consumers than it did and to persuade investors to fund the startup’s expansion.
As Bolt’s business relies on having a broad network of customers, the charges cast a pall over the tumultuous payments firm, which was reportedly valued at $11 billion by investors.
Bolt responded to the complaint in a filing, claiming that ABG’s assertions are unfounded and that they are “a clear attempt” to renegotiate the terms of the firms’ contracts. ABG’s spokesperson did not immediately respond to a request for comment. According to the suit, ABG’s agreement with the business allows it to purchase up to 5% of Bolt for $29 million. According to Bolt’s filing, it is not required to sell. That stake would be worth around $500 million at Bolt’s present price.
Bolt is going through a rough patch right now, so the lawsuit comes at a bad moment for him. Ryan Breslow, the business’s 27-year-old co-founder, made a series of explosive charges against many Silicon Valley heavyweights shortly after the company raised its previous round of investment in January, stating that the sector was a “boys club” governed by “mob bosses.” Breslow quit a few weeks later, claiming it had nothing to do with his comments, and took on a new role as chairman of the firm.
Bolt was rumored to be seeking new capital at a $14 billion value earlier this year, but the funding has yet to materialize. Bolt is in talks to raise more money, according to a spokeswoman, although she declined to comment on the valuation. Even in the money-soaked world of digital startups, Bolt’s revenue of about $40 million is remarkably low for a company with such a hefty price tag. Bolt said earlier this month that it has struck an agreement to buy cryptocurrency startup Wyre Payments Inc.
Bolt Financial Inc. is being sued by ABG Intermediate Holdings 2, LLC and ABG-SPG ES LLC in the United States District Court for the Southern District of New York.
Follow Startup Story
Related Posts
