Shapeways Executives Resign as 3D Printing Service Files for Bankruptcy

One of the original 3D printing service bureaus, Shapeways (Nasdaq: SHPW), has filed for Chapter 7 bankruptcy. This filing follows the company’s exploration of strategic alternatives to address its financial difficulties.

Filing for Bankruptcy

On July 2, 2024, Shapeways Holdings, Inc., along with its subsidiaries, filed a voluntary petition for relief under Chapter 7 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. The filing signifies the cessation of all operations, with a Chapter 7 trustee to be appointed to administer the company’s bankruptcy estate. The trustee will oversee the liquidation of the company’s assets, and an initial hearing for creditors will be scheduled.

The bankruptcy filing has triggered defaults on several of Shapeways’ outstanding debt obligations, notably including a $669,500 secured promissory note with 3DP Custom Manufacture, LLC. The filing accelerates the company’s repayment obligations under this and other debt instruments.

In conjunction with the bankruptcy filing, Shapeways’ executive team, including CEO Greg Kress, CFO Alberto Recchi, and COO Andy Nied, resigned from their positions. Additionally, the entire board of directors, consisting of Leslie C.G. Campbell, Raj Batra, Ryan Kearny, Greg Kress, Christine Gorjanc, Alberto Recchi, and Josh Wolfe, also resigned. These resignations were prompted by the bankruptcy filing and not by any disagreements regarding the company’s operations or policies.

Shapeways entered into a secured promissory note with 3DP Custom Manufacture, LLC on June 10, 2024, which included a principal amount of $669,500. The note carried an interest rate tied to the one-month term secured overnight financing rate (SOFR) plus 6%, with a maturity date of July 5, 2024. The note allowed the company to prepay without penalty and mandated the use of funds exclusively for payroll obligations. This agreement highlighted the company’s critical financial position leading up to the bankruptcy filing.

3DP Custom Manufacture, LLC appears to be a private lending entity that provided Shapeways with much-needed funds during a critical financial period. Details about 3DP Custom Manufacture, LLC are scarce, suggesting it may be a specialized financial firm or a private lender focused on providing high-risk, high-interest loans to companies in distress. Such entities typically operate in niches where traditional financing options are not available or feasible for the borrowing companies​

From Pioneer to Bankruptcy

Shapeways was founded in 2007 as a spin-off from Philips Electronics, aiming to revolutionize digital manufacturing with its 3D printing services. The company, headquartered in New York, quickly gained a reputation for providing high-quality, customizable 3D printed products. In 2010, Shapeways moved its headquarters to New York City, and by 2012, it opened a state-of-the-art 3D printing factory in Long Island City, NY, which became one of the largest consumer-facing 3D printing manufacturing facilities in the world.

While the company initially benefitted from the hype associated with the emergence of desktop 3D printers and, therefore, consumer 3D printing, it failed to keep up with the industry’s trajectory change after the 2014 public market burst. It continued to sell 3D printable consumer goods while other service bureaus refocused on industrial customers. By the time that former GE veteran and Open English executive Greg Kress came on in January 2018 as Shapeways CEO, it may have been too late.

In 2021, Shapeways went public through a merger with Galileo Acquisition Corp, a special purpose acquisition company (SPAC), which valued the company at $605 million. Despite this promising start, Shapeways struggled to meet its growth projections. By 2023, the company’s annual revenue was significantly below expectations, leading to substantial financial losses.

Looking Forward

One interesting segment impacted negatively by the closing of Shapeways is the tabletop gaming market, which relied on the firm’s public-facing shops to sell their 3D printable figures, landscapes, and other collectibles. The news comes at a time when this segment is flourishing and may be on the break of a broader market breakout, in which major game companies could finally find a successful market entry.

Another notable element to the story is the sale of Shapeways’ software division, excluding Shapeways’ proprietary InShape software, to OTTO dms, Inc., an entity wholly-owned by Shapeways’ CEO Greg Kress and software unit executive Greg Rothman. This could mean that the executives were able to squirrel away some assets that could be valuable in their own right and which they did not want impacted by the debt to 3DP Custom Manufacture.

Given the technological value and market reach of Shapeways’ assets, there is still potential that it could be picked up by a company that sees the business at being worth more than its debt. For instance, a number of private equity firms are consolidating service bureaus at the moment and it would seem that they could finagle a proper deal. $669,500 in debt may be nothing for a toy giant like Hasbro or Mattel (or both), the former having worked with Shapeways in the past.