Wag!: 66-Day Prepack Chapter 11 Transfers Ownership

On July 21, 2025, Wag! Group Co. and six affiliated entities filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware. The San Francisco-based pet care technology platform, once valued at $650 million when SoftBank invested $300 million in January 2018, pursued a pre-packaged restructuring plan aimed at eliminating approximately $16.3 million in secured debt and transitioning to private ownership under Retriever LLC, its primary secured lender.

The bankruptcy filing marked a reversal for the company that built an on-demand dog walking platform during the 2010s gig economy expansion. The debtors reported $29.4 million in assets against $29.9 million in liabilities as of December 31, 2024. The case moved from filing to final decree in 66 days, with the Plan confirmed on August 29, 2025, and the Effective Date occurring on September 1, 2025.

Debtor(s)	Wag! Group Co. (+ 6 affiliates)
Case Number	25-11358
Court	U.S. Bankruptcy Court, District of Delaware
Petition Date	July 21, 2025
Judge	Hon. Thomas M. Horan
Debtor's Counsel	Young Conaway Stargatt & Taylor, LLP
Restructuring Advisor	Portage Point Partners
Claims Agent	Epiq Corporate Restructuring, LLC
Pre-Petition Total Assets	$29.4 million
Pre-Petition Total Liabilities	$29.9 million
Secured Debt	$16.3 million (Retriever LLC)
PPP Loan Outstanding	~$40,000 (from original $5.1M; $3.5M forgiven)
Cash at Filing	~$1.7 million
DIP Facility	$6.5 million (Retriever LLC)
2024 Revenue	$70.5 million
2022-2024 Net Losses	$69.5 million cumulative
Confirmation Date	August 29, 2025
Effective Date	September 1, 2025
Plan Type	Prepackaged; debt-for-equity conversion
New Owner	Retriever LLC (100% equity)
Professional Fees	~$1.06 million

The Debtors and Case Administration

The Chapter 11 cases involve seven affiliated companies under Case No. 25-11358 (TMH), with Judge Thomas M. Horan presiding. The debtors include:

• Wag! Group Co. (Tax ID: 0180) - The parent holding company
• Wag Labs, Inc. (Tax ID: 4381) - The primary operating entity
• Wag Wellness, LLC - Operates subscription wellness services
• Pawsome, LLC (Tax ID: 2404) - Pet food review platforms
• Compare Pet Insurance Services, Inc. (Tax ID: 4657) - Licensed insurance broker
• We Compare, Inc. (Tax ID: 5054) - Insurance comparison services
• Furmacy, Inc. (Tax ID: 9977) - Prescription management software

The cases were jointly administered for procedural purposes, with the company's headquarters located at 2261 Market Street, Suite 86056, San Francisco, California 94114. Young Conaway Stargatt & Taylor, LLP served as bankruptcy counsel, while Portage Point Partners acted as the restructuring advisor. Epiq Corporate Restructuring, LLC served as claims and noticing agent. PricewaterhouseCoopers LLP continued as ordinary course professional for auditing services.

SoftBank's $300 Million Investment and Exit

Wag!'s path to bankruptcy included the SoftBank Vision Fund's $300 million investment in January 2018. The Japanese conglomerate acquired approximately 45% of the company at a valuation of $650 million.

Prior to the SoftBank investment, Wag! had raised approximately $68 million from backers including Battery Ventures and General Catalyst through a $4 million Series A in January 2016, a $15 million Series B in October 2016, and a $40 million round in April 2017.

After the investment, the company went through multiple rounds of layoffs, endured management changes, and shuttered its customer service hub in the Hollywood Hills. Wag! failed to get its anticipated global expansion off the ground while rival Rover continued to see increased sales. After the SoftBank deal, Wag! held nearly 23% market share in Q1 2018 but fell to about 16%. By December 2021, according to Bloomberg Second Measure data, Rover earned 93% of U.S. consumer sales compared to Wag!'s 7%.

In December 2019, SoftBank sold its stake back to the company at a price well below the $650 million valuation. As CNBC reported, Wag! held a San Francisco holiday party on a Friday with catered food, an open bar, and a photo booth—and the following Monday, let go of at least 90 staffers and announced SoftBank's departure. The company ultimately cut approximately 80% of its staff in an effort to streamline operations.

The SoftBank exit was part of a broader pattern of Vision Fund issues that included Uber, WeWork, and Slack. Duncan Davidson, a general partner at Bullpen Capital and investor in Wag!, dubbed SoftBank's approach "the SoftBank Syndrome," stating their "experience with SoftBank and their Wag investment has not been positive." In SoftBank earnings calls, Masayoshi Son said: "Like a dog-walking company and other portfolio companies, we may see similar problems surfacing."

Wag! vs. Rover

Wag! and Rover followed different trajectories. While Wag! started as a dog-walking startup in 2015, Rover had launched four years earlier as a boarding service for canines. Both companies eventually expanded upon their original offerings to become directly competitive.

Wag! raised more than Rover in the private markets—$361 million versus $311 million—yet the companies experienced different outcomes. Rover raised $155 million during its 2018 financing round in response to Wag!'s SoftBank investment, went public via SPAC in 2021 at a $1.35 billion valuation, and was ultimately acquired by Blackstone for $2.3 billion in February 2024—a successful exit that delivered $11.00 per share to stockholders, representing a 61% premium over Rover's 90-day average share price. Meanwhile, Wag!'s valuation fell from $650 million to under $6 million.

The Blackstone acquisition cited the pet care sector's growth potential—Bloomberg Intelligence estimates the global pet industry will reach $500 billion by 2030, up from $320 billion in 2023. Under Blackstone's ownership, Rover went private with plans for further expansion and investment, completing its 13-year journey from Seattle startup to private equity portfolio company.

In October 2019, Wag! was in discussions with several potential strategic buyers, including reportedly with Rover itself, but no deal materialized. The price tag was likely to fall far short of earlier expectations, and reports indicated that a deal between the rivals was unlikely to happen. By the time Wag! filed for bankruptcy in July 2025, Rover had been a Blackstone portfolio company for 17 months.

Financial Deterioration and Path to Bankruptcy

According to Chief Financial Officer Alec Davidian's first day declaration, Wag!'s financial troubles intensified following the COVID-19 pandemic. Monthly revenues declined rapidly after March 2020 as remote work reduced demand for dog walking services, leading to cumulative losses of $69.5 million from 2022 through 2024—comprising net losses of $38.6 million in 2022, $13.3 million in 2023, and $17.6 million in 2024.

Total 2024 revenue of $70.5 million represented a decrease of $13.4 million, or approximately 16%, from 2023. Notably, three Wag! Wellness customers accounted for approximately 38% of total 2024 revenue, creating significant concentration risk.

The company's public market journey included a SPAC transaction. Wag! announced plans to go public via SPAC in February 2022, and after completing the de-SPAC transaction in August 2022 with CHW Acquisition Corporation at a $350 million valuation—already far below the original $650 million SoftBank valuation—the stock price declined. By the time of the bankruptcy filing, shares were trading at approximately 12 cents, representing a market capitalization of less than $6 million.

De-SPAC performance. Wag!'s results were part of a broader pattern of de-SPAC underperformance. As of 2024, more than 85% of de-SPAC companies traded below their $10 IPO price, with the average SPAC valued at just 43% of its original IPO price. The de-SPAC sector as a whole saw returns fall by a median 88.6%, and 85 SPACs (29% of all de-SPAC companies) traded below $1 per share—including Wag!.

The SPAC itself had heavy redemptions. When CHW Acquisition shareholders approved the Wag deal on July 28, 2022, 97.78% of public shares were redeemed, leaving only $2.8 million in trust. The deal required CHW to secure a $30 million term loan and $16 million PIPE just to satisfy the minimum cash condition.

A critical trigger for the bankruptcy came when Wag! breached minimum liquidity covenants in its 2022 debt agreements. The original $32.2 million senior secured term loan was entered on August 9, 2022, concurrent with the de-SPAC, with Blue Torch Finance, LLC as collateral agent. The facility bore interest at SOFR plus 10.00% (or reference rate plus 9.00%) and included 1,896,177 lender warrants to acquire common stock. The company entered into two amendments to stave off default: a First Amendment on April 4, 2025, reducing the Minimum Liquidity Covenant from $5 million to $4.5 million (effective until April 18, 2025), and a Third Amendment on July 8, 2025, further reducing it to $1 million through August 9, 2025. On April 11, 2025, Retriever LLC acquired all debt obligations from Blue Torch Finance, becoming the pre-petition secured creditor. Alter Domus (US) LLC was appointed as collateral and administrative agent on July 7, 2025. With debt obligations maturing in August 2025 and unsuccessful attempts to secure third-party financing or a sale, the company faced what Davidian described as a "dire liquidity crisis" with only $1.7 million in cash against $2.2 million in accounts payable.

Failed Sale Process: 16 Parties, Zero Buyers

The disclosure statement reveals the extent of Wag!'s unsuccessful efforts to find a buyer or refinancing solution over nearly a year. In August 2024, the Board retained BofA Securities, Inc. to assist with a potential transaction, contemplated as a business combination or sale of substantially all assets.

All three parties that submitted indications of interest ultimately declined to proceed. One party failed to secure financing for a whole-company sale. A second party would only pursue a sale of substantially all assets free of any liabilities. The third party chose not to proceed due to limited interest in several of the Debtors' business lines.

Separately, the Board engaged Arc Capital Markets to assist in refinancing the Prepetition Financing Obligations, contacting 26 different parties including existing and new banking partners. Despite this outreach, the Board was unable to refinance the debt.

In July 2025, just before filing, the company sold its Furscription prescription management assets for $5 million, using approximately $3.5 million to pay down the Prepetition Financing Agreement. Combined with proceeds from a July 2024 public offering that raised $8.6 million net, these efforts were insufficient to address the liquidity crisis.

The Pre-Packaged Restructuring Plan

Wag!'s pre-packaged plan received unanimous approval from Retriever LLC (the sole voting class). As reported by Nasdaq, the key elements include:

• Debt Elimination: Complete cancellation of the $16.3 million in secured debt (at least $16,252,926.88 in allowed claims)
• Ownership Transfer: Retriever receives 100% of the New Common Stock plus $5 million in New Notes
• Existing Equity Cancellation: All current common stock and warrants eliminated with no recovery
• DIP Financing: $6.5 million facility from Retriever ($4 million available immediately)
• Exit Financing: Up to $21.05 million total:
  • $5 million in New Notes
  • ~$6.8 million for DIP Claims repayment
  • $9.25 million in new financing

A liquidation analysis showed that a hypothetical Chapter 7 would yield only $1.6 million to $4.9 million in net proceeds—sufficient only to provide 24% to 72% recovery on DIP Claims, with Financing Agreement Claims and equity interests receiving nothing. The Plan therefore satisfied the "best interests" test.

Business Operations During Bankruptcy

CEO and Chairman Garrett Smallwood emphasized that all business segments continued operating without interruption throughout the Chapter 11 process. According to the company's restructuring announcement, the services included:

• Core Platform Services: On-demand dog walking, pet sitting, and boarding through a network of over 500,000 independent Pet Caregivers serving more than 1 million Pet Parents
• Pet Insurance Comparison: Broker services through Compare Pet Insurance Services and platforms like Petted.com
• Wellness Subscriptions: Preventative care reimbursement programs ($14.95-$59.95/month) and 24/7 veterinary telehealth via Vet Chat
• Content and Commerce: Pet food reviews via DogFoodAdvisor.com (acquired for $9 million in January 2023) and premium pet products through the Maxbone brand
• Veterinary Software: Prescription management tools through Furmacy (sold pre-petition)

The company said its over 400,000 active users and network of gig workers experienced no service disruptions during the restructuring. As reported by KRON4, Wag! secured DIP financing from Retriever to maintain operations throughout the bankruptcy process.

First Day relief authorized continued payment of critical prepetition obligations:

Market Impact and Delisting

On July 23, 2025, just two days after the Chapter 11 filing, Nasdaq issued a delisting notice citing multiple listing standard violations, including failure to maintain the minimum $1.00 bid price and required $50 million market capitalization. The company's market capitalization had dropped as low as $6.3 million, and it also failed to maintain the $15 million minimum market value of publicly held shares.

Trading was suspended on July 30, 2025, with the stock transitioning to the Pink Open Market. The company's stock fell 35% following the delisting announcement and had lost over 91% of its value in the year leading up to bankruptcy.

Strategic Challenges and Industry Context

The pet care industry continues to grow—U.S. pet industry expenditures reached $152 billion in 2024, with projections of $157 billion for 2025 and growth to $250 billion by 2030. Pet ownership is expanding, with 94 million U.S. households now owning at least one pet. The global pet care market was valued at $259 billion in 2024 and is projected to reach $427 billion by 2032.

Dog walking market specifics. The U.S. dog walking industry was valued at $1.7 billion in 2024, with the global dog walking services market expected to reach $3.08 billion by 2035 (9.1% CAGR). The dog walking app market specifically stood at $600 million in 2024, with projections of $1.2 billion by 2033. Technology platforms have fundamentally transformed how pet owners book services—where owners once relied on local referrals and word-of-mouth, a few taps now connect them with vetted professionals in minutes.

The return-to-office trend following the pandemic coincided with increased demand for dog walkers. In New York City alone, dog walking bookings increased by 25% between July and September 2024 as pet owners who adopted dogs during the pandemic required reliable pet-care solutions. Industry surveys indicate that 70% of pet sitters expected revenue increases in 2024, with average gross revenue for pet sitting businesses reaching $100,537 in 2023—up from $94,563 in 2022.

Several structural issues affected the company:

• High Customer Acquisition Costs: Expensive marketing required to attract both pet owners and caregivers
• Disintermediation Risk: Unlike ride-sharing, pet care relationships encourage direct arrangements between customers and providers after initial connections
• Low Retention Rates: Difficulty maintaining recurring revenue as users bypass the platform
• Regulatory Pressures: Worker classification challenges, particularly in California's stringent labor environment where the ABC test makes it difficult for pet care platforms to classify workers as independent contractors
• Post-Pandemic Shifts: Reduced demand as remote work arrangements changed pet care needs

U.S. dog walkers earn between $36 and $54 per hour depending on location—well above the Bureau of Labor Statistics' $29.82 average hourly wage across all industries.

Case Outcome: 66 Days to Emergence

The prepackaged nature of Wag!'s bankruptcy enabled a 66-day restructuring. As Globe Newswire reported upon emergence, key milestones included:

• July 20, 2025: Prepetition solicitation of votes began
• July 21, 2025: Chapter 11 petitions filed
• July 22, 2025: First Day Hearing; Interim Orders entered
• August 29, 2025: Plan confirmed by Judge Horan
• September 1, 2025: Effective Date; reorganization complete
• September 25, 2025: Final Decree entered; cases closed

Total professional fees for the case were approximately $1.06 million. Young Conaway earned $576,710 (including $16,515 in expenses), Portage Point earned $480,413 (including $8,906 in expenses), and Epiq earned $3,564.

The case also resolved a pre-petition settlement with Marketplace Operations, Inc. (MPO), resulting in an allowed general unsecured claim of $2.75 million paid in cash. Additionally, a post-petition order on September 12, 2025, authorized rejection of a nonresidential real property lease in Phoenix, Arizona.

Frequently Asked Questions

What led to Wag!'s bankruptcy filing?

Wag!'s bankruptcy resulted from the convergence of several factors: cumulative net losses of $69.5 million from 2022-2024, a 16% revenue decline in 2024, breach of minimum liquidity covenants in its 2022 debt agreements, debt obligations maturing in August 2025, and unsuccessful attempts to find a buyer or refinancing. The company had only $1.7 million in cash against $2.2 million in accounts payable at filing.

What happened to SoftBank's $300 million investment?

SoftBank invested $300 million in January 2018 at a $650 million valuation, acquiring approximately 45% of the company. By December 2019, SoftBank sold its stake back to Wag! at a discounted price. The company's market cap had declined to less than $6 million by the time of bankruptcy—a 99%+ loss from the SoftBank valuation.

How did Wag!'s performance compare to Rover?

Despite raising more private capital ($361 million vs. $311 million), Wag! experienced different outcomes from Rover. After the SoftBank deal, Wag!'s market share fell from 23% to 16%. By December 2021, Rover earned 93% of U.S. consumer pet care sales compared to Wag!'s 7%. Rover went public via SPAC and was acquired by Blackstone for $2.3 billion, while Wag! went through bankruptcy.

What were the terms of the pre-packaged plan?

The Plan eliminated $16.3 million in secured debt, transferred 100% equity ownership to Retriever LLC (the secured lender), and provided Retriever with $5 million in New Notes. Existing shareholders received no recovery—all common stock and warrants were cancelled. General unsecured claims were paid in full in the ordinary course, while administrative and priority claims received 100% recovery.

What happened to existing shareholders?

Existing shareholders received no recovery. All common stock and warrants were cancelled under the Plan. The stock, which had been trading at approximately 12 cents (market cap under $6 million), was delisted from Nasdaq on July 30, 2025, following the bankruptcy filing. Shares transitioned to the Pink Open Market before cancellation.

How long did the bankruptcy process take?

The case completed in 66 days from filing to final decree, reflecting the prepackaged nature of the restructuring. Petitions were filed July 21, 2025; the Plan was confirmed August 29, 2025; the Effective Date was September 1, 2025; and the Final Decree closing the cases was entered September 25, 2025.

What DIP financing was provided?

Retriever LLC provided $6.5 million in DIP financing, with $4 million available immediately upon filing. The DIP facility funded operations during the bankruptcy process and was repaid or converted as part of the exit financing, which totaled up to $21.05 million.

What was the sale process outcome?

The company's pre-petition sale process contacted 16 parties, resulting in 7 signed NDAs, 4 management meetings, and 3 non-binding IOIs—but zero completed transactions. One party failed to secure financing, one would only pursue an asset sale free of liabilities, and one declined due to limited interest in certain business lines. Separate refinancing efforts contacting 26 parties also failed.

What business lines does Wag! operate?

Wag! operates multiple pet care business segments: the core on-demand platform (dog walking, pet sitting, boarding) with 500,000+ caregivers and 1 million+ users; wellness subscriptions (Wag! Premium, Vet Chat telehealth); pet insurance comparison services (Compare Pet Insurance, Petted.com); and pet content/commerce (DogFoodAdvisor.com, Maxbone apparel). The Furscription prescription management business was sold pre-petition for $5 million.

Who owns Wag! after bankruptcy?

Retriever LLC, the company's pre-petition secured lender, emerged as the 100% owner of the reorganized Wag!. Retriever received all New Common Stock plus $5 million in New Notes in exchange for its $16.3 million secured claim. The transition to private ownership removed the company from public markets and quarterly earnings pressures.

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For additional information about the restructuring and to explore developments in similar cases, visit the ElevenFlo Bankruptcy Blog.