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Virtual reality arcades and other out-of-home VR destinations have been some of the worst affected businesses during the COVID-19 pandemic. Sandbox VR, one of the most well-funded in the industry, has been no exception, as the company’s US-based subsidiary Glostation USA Inc. filed for bankruptcy back in August. Now it’s come to light that Glostation has been reorganized, effectively pulling itself out of Chapter 11 bankruptcy.

Update (December 10th, 2020):  A representative from Glostation tells Road to VR that, as of late last month that, Sandbox VR’s US subsidiary, Glostation USA Inc.’s court-approved reorganization plan has allowed it to emerge from its Chapter 11 bankruptcy, which was filed in August 2020. Glostation tells us the company was able to restructure remaining debts to stabilize financials and continue to grow its operations.

According to Bloomberg, to keep doing business, the California-based Glostation is receiving funds from parent company Sandbox VR Inc, which includes a restructuring amount of $13.6 million of secured debt.

With an effective vaccine on the rise, it seems backers are hopeful for a possible resurgence of the company’s location-based VR facilities. The original article reporting the company’s Chapter 11 filing follows below:

Original Article (August 14th, 2020): Sandbox VR does business in the United States under the name Glostation USA Inc., which has filed for Chapter 11 (along with a number of associates) at the U.S. Bankruptcy Court in Woodland Hills, California. The news was first reported by The Wall Street Journal.

Sandbox operates multiple locations in North America and Asia, and hosts both branded VR content such as its Star Trek: Discovery experience and in-house developed games. Experiences last around 20 minutes and can accommodate up to six people per session.

Despite having already reopened a handful of locations recently it appears the damage of staying closed for such an extended time has taken its toll on the company. Back in early June, Sandbox VR CEO Steven Zhao told Protocol that the company had effectively lost “100% of the revenue,” something that led Sandbox to lay off 80% of its staff. Former CEO Siqi Chen and a number of the company’s developers also left the company.

Since its founding in 2016, Sandbox has garnered over $80 million in outside funding, with the most recent round led by celebrities such as Justin Timberlake, Katy Perry, Orlando Bloom, and Will Smith. Sandbox was also funded by Andreessen Horowitz, Alibaba, Floodgate Ventures, Stanford University, Triplepoint Capital, and CRCM.

According to WSJ, the company was close to securing over $50 million in equity funding prior to the pandemic lockdown. This was put on hold back in March, which ruined plans for the company to open around 20 new locations.

Still, Sandbox says its reached a deal with the company’s lenders to restructure debt and reopen its locations once things eventually get back to normal. Whether there will be a ‘normal’ in the short term still remains to be seen though. Many VR arcades, like Hologate have put in more visible cleaning and sanitizing regimes that they hope will ease the public back in, but it’s sure to be an uphill battle any way you slice it.