Dog-Walking Startup 'Wag' Files For Bankruptcy

An anonymous reader quotes a report from SFGATE: During the 2010s' boom in on-demand services such as Uber and DoorDash, Wag staked a claim to the market for dog walking. It became a buzzy, high-flying company, at one point gaining a valuation of around $650 million, and grew to offer a whole range of tech products for pet care. But as the years passed, struggles mounted and profits remained elusive. On July 21, Wag filed (PDF) for bankruptcy. To stay alive, the San Francisco-headquartered company is now using bankruptcy court to restructure in what's known as a Chapter 11 process. Its lines of business -- including gig-work dog walking and sitting, pet insurance, and the veterinary tool 'Furscription' -- will remain open, according to a news release. If a judge approves Wag's restructuring plan, it will take the company off the public markets and into the private hands of a company called Retriever.

On the same day of the bankruptcy filing, Wag's chief financial officer, Alec Davidian, submitted a document (PDF) supporting and explaining the move. He wrote that Wag's 'monthly revenues declined rapidly after March 2020 as a result of the COVID-19 pandemic' and pointed to $69.5 million in losses from 2022 through 2024. The losses weren't Wag's only problem. The company had taken out debt in 2022 when it went public, and in that loan agreement, it had set a minimum level of cash Wag would need to have on hand at all times. This year, Wag dropped below that amount, Davidian wrote. Wag also failed to find a third-party deal to get more money, the CFO noted, and its debt obligations are set to mature in August, meaning the company was 'facing a dire liquidity crisis.' So, Wag opted for the bankruptcy proceeding, in which it plans to eliminate the 2022 debt, which is currently held by Retriever. 'Through the Restructuring,' Davidian wrote, '[Wag] will emerge from these Chapter 11 Cases a stronger company, with a more sustainable capital structure that is better aligned with [Wag's] present and future operating prospects.'

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