Amazon's top players were exposed for executives' selfishness, leading to the company's bankruptcy!

Amazon, once a top player in the market, has gone bankrupt, but there is another hidden reason for its bankruptcy.

Thrasio accused of bankrupting company through executive embezzlement

Recently, Thrasio, Amazon's former leading brand aggregator , was accused of using its founder and several former senior executives to gain hundreds of millions of dollars in personal gain, which led to the bankruptcy of Thrasio.

The client named several former Thrasio executives as defendants in the filing and requested the court to issue an order requiring the defendants to pay compensation, return illegal gains, and impose corresponding penalties.

According to documents leaked from the New Jersey Bankruptcy Court, Thrasio executives claimed that the company was worth more than $12 billion. They induced equity investors, debt investors and small business owners to invest by exaggerating the company's value.

After obtaining investment, they did not spend time on integrating the operations of the acquired business, but instead focused on maximizing their personal interests.

The daily acquisition business simply adopted the existing logistics system of the acquired sellers, which led to the company cooperating with multiple third-party logistics companies and warehouse agents, and the operation network efficiency was very low. Even Thrasio’s executives had no idea about the actual operation and directly relied on outsourced suppliers to help manage inventory. In the long run, this vicious cycle had a very adverse impact on the company’s e-commerce business.

The client also pointed out that Thrasio does not have the expected profitability, often causing losses for its once hot-selling products, and its market predictions are inaccurate. The company has claimed that it has been profitable every month since its establishment, but its actual operating conditions are that it has been consuming a large amount of money and has lost billions of dollars in just a few years.

The financial data Thrasio published was inaccurate, and the financial statements used improper means to make the company's profits appear higher. At the time, Thrasio's inventory and financial systems were in a state of complete disarray, and Thrasio had no way of completing audited financial statements for 2020 before June 30, 2022, which allowed Thrasio's executives to conceal the fact that Thrasio was insolvent in the years before bankruptcy.

Moreover, Silberstein, one of Thrasio's founders, concealed the fact that the company's new chief financial officer suddenly resigned.

According to audit data, Thrasio's cumulative losses amounted to US$302.9 million, and its auditor had "significant doubts" about Thrasio's "ability to continue operating."

The client alleges that Thrasio's two founders, Silberstein and Cashman, embezzled tens of millions of dollars from the company and pressured Thrasio to invest in related businesses founded by defendant Horowitz.

The client listed the personal income that Thrasio's executives received through acquisitions and secondary transactions before Thrasio filed for bankruptcy, including $228 million for founder Joshua Silberstein, more than $90 million for another founder, and $338 million for the six defendants. The client said that these executives completely emptied the company's assets.

The client's allegations involved various misconducts by Thrasio executives, including financial fraud, conflicts of interest, misappropriation of funds, etc., which ultimately led to the bankruptcy of Thrasio.

How did Thrasio go from glory to collapse?

It is a pity that the once prosperous leading enterprise fell from the top of the industry to the bottom in just a few years.

Thrasio was founded by Cashman and Silberstein in 2018. The company pioneered a new business model of "capital acquisition + brand operation" and is a leader in this field. The company has been deeply involved in the Amazon platform for a long time, committed to acquiring potential brands and operating and fully empowering the acquired brands.

Thrasio purchases high-quality brands from sellers and uses its own team's professional operational capabilities to promote and sell the brands. This innovative model enables Thrasio to quickly expand the brand scale, increase market share, and achieve rapid brand growth.

Thrasio's CEO Greg Greeley once said that Thrasio is one of the largest third-party sellers on the entire Amazon platform, and products from several of its brands have entered Amazon's small category BS list.

At the same time, Thrasio has received a lot of capital support and promotion during its development.

In July 2020, Thrasio completed its Series C financing led by Advent International. Within just two years of its establishment, the company's valuation has reached US$1 billion, setting a new record for US unicorns.

In October 2021, after Thrasio completed a $1 billion Series D financing round, its valuation soared to $10 billion, making Thrasio the fastest startup in the United States to reach a market value of $10 billion.

After that, Thrasio made rapid progress with a frequency of 1.5 acquisitions per week, and even considered going public through SPAC.

However, with the end of the epidemic, the growth rate of e-commerce consumption in Europe and the United States began to return to normal levels, and Thrasio's bubble began to gradually burst.

In 2022, the company went through what was described as widespread layoffs and a change in management, including the CEO. The company said in the memo that it had "decided to reduce the size of the Thrasio team" and make certain "strategic and operational changes."

In 2023, The Wall Street Journal reported that in order to solve financial problems, Thrasio was actively exploring restructuring options and had begun discussing various solutions with consultants and lawyers, including the possibility of filing for bankruptcy.

Although every possible means was tried, bankruptcy protection could not be avoided.

On February 28, 2024, Thrasio filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code with a court in New Jersey.

The company expects assets to be between $1 billion and $10 billion and liabilities to be between $500 million and $1 billion, according to a filing in New Jersey Bankruptcy Court .

The company has reached an agreement with lenders to reduce its debt burden by about $495 million. At the same time, some creditors have pledged to provide it with up to $90 million in new capital for the continued operation of the brands in its portfolio.

Thrasio eventually went bankrupt. In addition to the client's accusation that several former executives of the company abused their power for profit, industry insiders believed that there were also many problems within the company.

First, in order to expand rapidly, Thrasio acquired many brands at a high premium, which increased its financial burden. Second, in order to meet the rapidly growing demand, Thrasio stockpiled a large amount of inventory, which caused serious inventory backlogs and led to a tight capital chain. Finally, the global supply chain disruption in the past two years also severely impacted Thrasio's profitability.

In addition to Thrasio, several other Amazon aggregators are also having a hard time.

On October 15, 2024, Olsam, the largest Amazon brand aggregator in the UK, filed for bankruptcy due to huge financial difficulties.

In September 2023, Amazon aggregator Acquco was sued by lenders in the New York Supreme Court for defaulting on loans.

In August 2023, one of Thrasio's main competitors, Benitago Group, filed for bankruptcy.

Benitago co-founder and CEO Santiago Nestares Lampo said in a filing with the bankruptcy court that consumer preferences changed when quarantine ended in the late stages of the pandemic. Since then, the company has experienced a rapid and dramatic reversal of fortunes due to macroeconomic factors, with the e-commerce industry shrinking significantly over the past two years and continuing to decline.

The bankruptcy of several Amazon aggregators has served as a profound wake-up call for the entire industry and market. While pursuing rapid development, companies also need to focus on sound operations and risk control.

Amazon Aggregator

Bankruptcy