Former Loot Crate eyes approval of credit card processing settlement

By Caroline Salls

Pittsburgh, March 5 – Old LC, Inc., formerly Loot Crate, Inc., requested court approval of a $700,000 settlement reached with Worldpay, LLC, according to a motion filed Wednesday with the U.S. Bankruptcy Court for the District of Delaware.

The company said Worldpay processed credit card payments for Old LC’s customers since July 2017 under a bank card merchant agreement.

Old LC said the parties’ processing agreement allows Worldpay to establish from amounts payable to the debtors and/or cause the debtors to prepay a reserve of funds to cover anticipated fees, chargebacks, returns and any other applicable assessments and/or require the debtors to establish an irrevocable standby letter of credit as collateral for anticipated chargebacks and fees.

As of Loot Crate’s bankruptcy filing date, Worldpay had withheld and reserved $1.74 million comprised of a portion of payments made by customers using Worldpay’s credit card processing services.

The Old LC debtors filed a lawsuit on Oct. 16 against Worldpay, seeking approval to surcharge the reserve held by the processor and seeking an injunction and payment of damages arising from Worldpay’s alleged willful violation of the automatic stay imposed by Loot Crate’s bankruptcy filing.

Under the proposed settlement, Worldpay will pay $700,000 to the company that purchased Loot Crate’s assets and will release all but $200,000 held in the reserve.

The $200,000 will continue to be held in reserve by Worldpay for refunds, claims, chargebacks, reversals and transaction fees.

Any funds remaining in the reserve on the first anniversary of the settlement’s effective date will be released by Worldpay to the buyer.

The processing agreement will be deemed rejected and terminated on the effective date, and Old LC’s lawsuit will be dismissed.

A hearing is scheduled for March 26.

Los Angeles-based Loot Crate sells pop culture subscription boxes. The company filed bankruptcy on Aug. 11, 2019 under Chapter 11 case number 19-11791.

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