Choxi filed for Chapter 11 bankruptcy protection in December after creditors tried to force a liquidation of its assets by filing an involuntary Chapter 7 bankruptcy petition.

Online-only flash-sale retailer Inc. is headed to the auction block.

A U.S. Bankruptcy Court judge has set a deadline of noon Eastern on Jan. 9 for bidders to submit their offers for Choxi, formerly known as Inc., if they wish to challenge a stalking horse bid made by N.D. Gems Inc. and 9th LLC, together. Both firms are listed as suppliers to Choxi. The auction, if required, will be held Jan. 12 and requires a minimum offer of $2.5 million, according to court documents.

The bankruptcy and auction are the latest twists for Choxi, which has had an unresponsive e-commerce site since the fall and has not been active on social media since mid-August. Consumers for months have aired their frustration with Choxi via social media, created complaint pages about the e-retailer and posted more than 1,400 complaints with the Better Business Bureau. CEO Deepak Agarwal left Choxi in August and general counsel for the retailer at the time said a handful of executives were handling the CEO’s role.

Creditors of the e-retailer filed an involuntary Chapter 7 bankruptcy to liquidate Choxi on Nov. 10, and the case was converted Dec. 5 to a Chapter 11 bankruptcy petition filed by Choxi in U.S. Bankrupcty Court in the southern district of New York. Choxi cites a total of nearly $34 million owed to creditors and $1.49 million in assets, with the biggest asset being its customer list valued at $500,000, according to court documents.

Tracy Klestadt, listed as the attorney for Choxi, could not be reached for comment. Choxi is No. 48 in the Internet Retailer 2016 Top 500 Guide with estimated 2015 web sales of $980 million, according to data.


Timmy Garewal, co-founder and president of 9th LLC, said the company is a logistics vendor and is connected with N.D. Gems. Given the legal proceedings, he said he could not comment on the bid or plans for Choxi.

Court documents list both companies as creditors of Choxi. N.D. Gems has a $1.1 million secured claim against Choxi and 9th LLC has a $681,125 secured claim against the retailer. A secured claim, as opposed to an unsecured claim, means a creditor has a lien on assets or property owned by the party in bankruptcy (Choxi).

Founded in 2010 as NoMoreRack, Choxi quickly soared within the ranks of online apparel retailers, riding a wave of popularity for so-called flash sales of a limited number of apparel items that are purchased in volume and sold at deep discounts for a short period of time. But when the flash-sale model declined in popularity and Choxi attempted to broaden its product lines, the company ran into problems. Those troubles coincided with its decision to change its name from NoMoreRack in April 2015 after Nordstrom Inc. (No. 18 in the Top 500) sued for alleged trademark infringement, claiming it had ownership of the “Rack” name when it came to e-commerce. The case was dismissed in February 2014.