CaaStle, a provider of clothing rental logistics services for brands including Maje, Ralph Lauren and Rebecca Minkoff, has furloughed all employees and faces liquidity issues following fraud allegations against founder and former chief executive Christine Hunsicker, according to a March 29 letter sent by the company’s board to shareholders and reviewed by The Business of Fashion.
Hunsicker, who launched the company as extended-sizing rental service Gwynnie Bee in 2011, had given some investors “misstated financial statements and falsified audit opinions, as well as capitalisation information that understated the number of company shares outstanding,” the letter said.
“The company is facing a severe and immediate liquidity problem,” the board said in the letter, which was first reported by Axios.
Hunsicker has resigned as CEO and director, while law enforcement is investigating the matter, according to the letter.
Last year, Hunsicker founded holding company P180 alongside retail veteran Brendan Hoffman, the former CEO to Wolverine World Wide and Vince. P180 has since acquired a majority stake in Vince as well as a minority investment in the New York-based label Altuzarra. Hoffman was re-installed as the CEO of Vince earlier this year.
As the rental category expanded in recent years, CaaStle emerged as a major player in the space and a competitor to platforms like Rent the Runway and Nuuly. But a number of its brand partners have since cancelled their rental verticals, including Bloomingdale’s. On Tuesday morning, Borrow by Elysewalker and Maje Forward — both powered by CaaStle — were not operating.
CaaStle has raised more than $500 million in fundraising, Axios reported, and counts Bill Ackman as an investor. CaaStle and P180 representatvies could not immediately be reached for comment.
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