The company’s problems increased due to the pressure of inflation and high interest rates.
Actors Kristen Bell and Dax Shepard filed for bankruptcy after their baby products company, Hello Bello, encountered high shipping and production costs.
In its bankruptcy petition filed on Monday, the Los Angeles-based company, which is backed by private equity firm VMG Partners, listed assets and liabilities with a combined value of at least $100 million per category.
The filing protected the company from creditors while trying to sell itself out of bankruptcy protection, reports Bloomberg.
In the past few years, the company has suffered from high material and shipping costs, which were a major contributor to its eventual bankruptcy. Hello Bello attempted to keep these costs in check by building its own diaper factory in Texas, but the move further strained the company’s finances and did not yield a sufficient amount of cost savings to help it turn its business around.
“Given macroeconomic trends, including inflation and increased shipping costs, we believe that this course of action is the best path forward to ensure that Hello Bello continues to bring families the highest quality and most environmentally friendly products at affordable prices,” said Erica Buxton, the company’s chief executive officer, in a statement.
Hildred Capital Management is one of the private equity firms that has offered to buy Hildred out of bankruptcy, according to a recent statement. The proposal, valued at about $65 million, sets the stage for other potential bidders, according to court papers.
A statement issued by Bell and Shepard at the time indicated that the brand was launched in 2019 along with a deal to sell the products exclusively at Walmart Inc.
The company’s problems have increased due to the pressure of inflation and high interest rates that have weighed heavily on other consumer companies like Bed Bath & Beyond this year.
Among the brand’s largest creditors, which would appear to be a tissue products supplier, they may be owed over $22 million, according to court documents.
Hello Bello was founded in 2019 by Bell and Shepard. Among their products are diapers, sunscreen, and baby wipes. Shepard joked during an interview with CNBC’s Making It that children are “parasites,” so that costs can add up fast. In order to address an issue so many new parents face, they developed an affordable baby product line.
In an interview with Ellen DeGeneres, Bell said she was proud of the company’s ability to distribute more than one million diapers in its first year. “When we started this, we were very honest with the people we collaborated with,” said Bell.
“And we were like, ‘We don’t need another paycheck, just to be blunt. We want to make a for-profit company that does really good things in the world that has accessibility and makes sure the parents [don’t have] to choose between their baby and their budget.”