BlackRock Inc. has initiated the sale of the German startup SellerX after a granted loan went into distress. The unusually aggressive measure culminates in an auction that is set to take place on September 17 at a hotel in Berlin, according to an announcement in the Börsen-Zeitung on Friday. In Germany, such auctions are frequently used when creditors want to take control of a company following failed negotiations, often wiping out the investors' equity.

This development illustrates the accelerated consolidation in the so-called aggregator industry. These companies had raised billions in recent years to buy popular brands on Amazon.com, but the end of the pandemic-driven e-commerce boom has led many of these firms into a debt trap.

The advertisement mentioned that GLAS, a provider of debt management services, is conducting the auction. In company documents, GLAS is referred to as the security agent for the loan facility of SellerX, which was granted by BlackRock and Victory Park Capital.

Neither BlackRock nor Victory Park Capital wanted to comment on the matter. There was also no statement from L Catterton and SellerX.

In 2021, BlackRock and Victory Park Capital granted SellerX a loan of $400 million, which was increased last year when SellerX acquired competitor Elevate Brands. Since then, BlackRock has placed the loan on "nonaccrual status" – meaning that the borrower has ceased payments. In a recent conference call, BlackRock stated that they are in discussions with SellerX's stakeholders to find a "path to recovery.

SellerX, once valued at one billion US dollars, was among the many startups that set out to become digital consumer goods conglomerates. However, the slow growth of online commerce post-pandemic left many aggregators with debts they could not service. This led to a consolidation where investors such as BlackRock, L Catterton, and Victory Park Capital competed to negotiate turnaround strategies for the struggling companies.

L Catterton, supported by LVMH and the family holding of the world's second-richest man, Bernard Arnault, invested equity in several aggregators. BlackRock and Victory Park Capital provided loans to several companies. Therefore, these three companies frequently negotiate restructuring strategies for distressed aggregators.

Victory Park Capital, which received a commitment for credit facilities of up to 500 million US dollars from Apollo Global Management Inc. in 2021, is currently being acquired by Janus Henderson Group Plc. The acquisition is expected to be completed later this year.

SellerX, founded in 2020, raised a total of more than $750 million in debt and equity. The founders, who served as co-CEOs, have announced their departure from the company, as reported by Sifted, a publication specializing in European startups.