Rental platform CaaStle files for bankruptcy amid fraud controversy

CaaStle Inc. has descended into bankruptcy, a new court filing has revealed, months after its former chief executive officer, Christine Hunsicker, was accused of fraud. The rental platform has filed for Chapter 7 bankruptcy in the District of Delaware, and is further preparing to liquidate its business.

The petition, filed as case number 25-11187, showed CaaStle, which has worked with brands like LK Bennett and Derek Lam on branded rental offerings, had assets in the range of 10 to 50 million dollars, with liabilities in the range of 10 to 50 million dollars. The company’s number of creditors sits between 200 and 999. The filing was signed by George Goldenburg, who took over as interim chief executive officer after Hunsicker stepped down in March.

Hunsicker’s departure came after concerns heightened over CaaStle’s financing. A letter sent to investors in March, following the furloughing of employees, had alleged Hunsicker had been providing “misstated financial statements and falsified audit opinions, as well as capitalisation information that understated the number of company shares”.

Hunsicker ultimately resigned as CEO and director, with law enforcement then believed to have launched an investigation. Hunsicker was accused of leaving the company with a “severe and immediate liquidity problem”, with net losses amounting to 81 million dollars in 2023.

Hunsicker and CaaStle had already been tackling legal issues prior to these allegations, however. The company was accused of infringing on the trademarks of US clothing brand Express, which had been working with CaaStle on a subscription service. When Express’ IP was acquired by EXP Topco and WHP Global, Hunsicker had agreed to cease using the brand’s name and trademarks, however, no official settlement agreement was ever signed.

In addition, P189 Inc., a company co-founded by Hunsicker which controls Vince Holding Corp and has a stake in Altuzarra, is also taking CaaStle and Hunsicker to court under the Racketeering Influenced and Corrupt Organisations Act. The firm, which was also founded by Brendan Hoffman, accused Hunsicker and CaaStle of hiding financial data and lying about the success of the company.

The company had reportedly already been eyeing a Chapter 11 process earlier this year, and in April, told shareholders that it had secured a 2.75 million dollar bridge loan to help support the impending bankruptcy. A letter seen by WWD at the time said that an existing investor affiliated with former director Scott Callon had provided the financing, which would be used to buy time to figure out what is next for CaaStle.

FashionUnited has contacted CaaStle with a request to comment.