In a shocking turn of events, the once-thriving candle supply company Sixteen Seventeen, known for its luxury vessels, waxes, and unique fragrance oils, finds itself immersed in the complexities of Chapter 7 bankruptcy. The abrupt closure, initially disguised as a moving sale, now reveals a financial landscape marred by debt, unanswered questions, and the impending liquidation of assets.
Chapter 7 Bankruptcy Filing: Liquidation
On February 5, 2024, Vanessa McGee, the visionary entrepreneur behind Sixteen Seventeen, filed for Chapter 7 bankruptcy, marking a stark departure from what appeared to be a flourishing business. Notably, former CFO Tia was not listed in the filed documents. The case, under the jurisdiction of the Northern District of California, US Bankruptcy Court, paints a grim financial picture.
The breakdown of assets and liabilities reveals a challenging financial landscape. The total property assets are estimated at $150,000, while liabilities are approaching half a million dollars, with approximately $450,000 owed to creditors (refer to the summary of assets and liabilities on page 7 in the attached bankruptcy filing below).
Moving Sale Impact: Analysis of Debts and Inventory
In light of the recent bankruptcy filing by Sixteen Seventeen, the company's transition from a purported moving sale to a potential liquidation event warrants examination. While the sale aimed to reduce inventory, the outcome fell short of expectations, with a significant portion of inventory remaining unsold, over $130,000 worth of candle supplies left untouched.
The highly coveted candle vessels, such as the Passion Prints and Evermore vessels, were essentially sold out, however $15,000 worth of vessels remain, the bulk of which are comprised of the Sunrise and Sunset tulip-shaped tumblers. Over $42,000 worth of wax blends and approximately $40,000 worth of proprietary fragrance oil blends are now stranded in warehouse inventory.
As the bankruptcy filing reveals, Sixteen Seventeen owes substantial amounts to various businesses, shedding light on the company's financial entanglements. Over 20 businesses are owed payments from Sixteen Seventeen. Major debts include $100,000 to Shopify Capital and $172,000 to JP Morgan Chase bank for a business line of credit. The list of creditors all but confirms Aromatic Fragrances International (AFI), owed an unknown amount, as the manufacturer of Sixteen Seventeen’s unique fragrances. Debts to marketing-related businesses include $20,000 to Yotpo and $20,000 to Sound Communications, which may explain the sudden erasure of Sixteen Seventeen’s online presence.
Shipping and Supplier Woes: Unraveling Financial Strain
The bankruptcy filing further exposes Sixteen Seventeen's financial strain, with significant debts to shipping entities. With over $50,000 owed to UPS, $15,000 to Kelly Spicers, a paper and packaging company, and an unknown amount owed to ShipStation, reflects the challenges of rising shipping costs in the industry.
While the bankruptcy unveils the dire financial state of Sixteen Seventeen, a glimmer of hope emerges for fragrance enthusiasts. Not even a month after the abrupt closure, original formulations of Sixteen Seventeen's custom fragrances are already surfacing in the market. Makers can find them at Deep South, Hive and Honey, and Maple Street.
Suppliers interested in carrying supplies similar to Sixteen Seventeen should keep a watchful eye on the upcoming auction for the liquidation of their inventory, which presents an opportunity to acquire these fragrances, vessels, wax, wicks and dye at a fraction of the cost.
The attached bankruptcy filing reveals Sixteen Seventeen's struggle with a 30% drop in gross revenue from 2022 to 2023, where gross revenue decreased from $2.3 million in 2022 to $1.6 million in 2023. Over-leveraged with $12,000 in rent and a staggering $23,000 a month in payroll, the company faced insurmountable overhead costs.
The Lease Conundrum: Two Years Remaining
Among the intricate details of Sixteen Seventeen's financial documentation lies a significant piece of the puzzle—the lease commitments. With 22 months remaining on the office lease and two years remaining on the warehouse lease, it becomes evident that Sixteen Seventeen was not in the midst of a planned relocation.
The Motive Behind the Alleged Moving Sale Deception
The decision to orchestrate a moving sale rather than a more transparent going-out-of-business event raises speculation and leaves the fragrance community puzzled. Various theories have been discussed within the community regarding why the company chose to present a front of relocation. Speculations include mitigating negative perceptions associated with a going-out-of-business sale, downplaying financial difficulties, clearing out existing inventory more effectively, and possibly planning to move by getting out of their lease. However, without direct communication from the owner, we may never know the true motivations behind their actions.
As the legal proceedings unfold, it's worth noting that moving sale prices often surpass those of a standard liquidation auction. Ultimately, it will be up to the court to determine how assets will be distributed among creditors and stakeholders. The first bankruptcy proceeding on the docket is set for March 8, 2024 at 09:30 AM via Videoconference. A 341(a) meeting of the creditors will allow interested parties to address concerns about the company's financial situation.
While the fragrance community may no longer be grappling with the closure of Sixteen Seventeen, the challenges faced by small suppliers in an industry impacted by rising costs are undeniable. Many small suppliers are working tirelessly to fill the gaps and provide the materials makers need. In these times, showing love and support goes beyond mere sentiment. It means actively supporting your favorite suppliers with your purchases. As costs rise, the loyalty of customers becomes paramount to small business owners.
Let's not forget the valuable lesson of diversification—having multiple suppliers for the same materials. Makers, now more than ever, are navigating new websites to find reliable suppliers. If your go-to wax is out of stock, having an alternative supplier can make all the difference. In this interconnected community, every purchase counts, ensuring the longevity of our cherished suppliers. So, let's continue to show our love and help sustain the vibrancy of our fragrance-making community.
Note: This article is based on publicly available information as of the date mentioned and may be subject to updates as the situation unfolds. See attached bankruptcy filing for more details.
Retraction: This article was originally published under another headline.
We sincerely apologize for any confusion or alarm caused by the original clickbait-style title used in this article. Our intention was to shed light on the challenges faced by Sixteen Seventeen and the broader fragrance community during this difficult time. We understand the importance of responsible journalism and regret any misrepresentation that may have occurred. It's important to note that despite our efforts to reach out to the owner for comment, we received no response. Moving forward, we are committed to providing accurate and informative content to our readers. Thank you for your understanding.
Not one of their fragrances were "proprietary"- every single one was a dupe. They had AFI replicate fragrances by Tom Ford, Byredo, etc. Another lie told by 16/17.