Denton County boutique's bankruptcy leaves hundreds of customers asking for refunds
DENTON COUNTY – A Denton County boutique is out of business, leaving hundreds of surprised customers asking for refunds.
James and Elizabeth Allen own the Sapphire Sky Boutique, a company that reported about $1.5 million in revenue last year.
Elizabeth Allen would frequently host live shows on Facebook to display and sell items made by the brand Loungefly. The Disney and Harry Potter themed backpacks start around $85 and are a hit with collectors.
While many of the items were available for quick shipping, Sapphire Sky also sold exclusive products on pre-order, which required customers to pay up front and wait for delivery. Carla Collier ordered a Hogwarts Express backpack. "They said it was exclusive to them," said Collier. "So if you wanted it, you had to get it from them."
But the bag never came. "They just kept saying, 'there's a delay, we're sorry, there's a delay,'" said Collier. "They wouldn't give any reason."
CBS News Texas interviewed more than half a dozen customers with similar experiences with Sapphire Sky.
"They said March, then they said June, and then they said July, "said Cassie Rost. "And then the last one I think they said was October."
"I finally started emailing them at the end of July, saying, 'okay, I think I'm done waiting for my bags. Now I'm ready for a refund,'" said Jennifer Vislisel.
Elizabeth Allen addressed the shipping delays during a live show in July, telling customers to email customer service if they wanted a refund. "She was getting bombarded with a lot of 'where's my items,' 'where's my stuff,' and 'I want a refund,'" said Rost.
"And then she's like, 'block that person, block that person,'" said Michele Honea, another customer.
Vislisel and other customers say toward the end of the summer, Allen tried to calm concerns that the business was in trouble. "She's like, 'we aren't going to file bankruptcy, we're not going to do that. We're not going to leave you guys high and dry, we won't do that,'" Vislisel remembers. "And that's exactly what they did."
In September, Sapphire Sky was locked out of its warehouse for failure to pay rent.
In October, the company filed for Chapter 7 bankruptcy. During one court hearing, James Allen admitted that the money from pre-orders had gone to other expenses.
"They took that money in, which should have been directly allocated for those bags," said Honea. "Instead of doing that, they spent it in other places. Where? No clue."
"They shouldn't have been taking orders if they knew that they were in the hole so bad that bankruptcy was an option," said Malik Beckett. "Because you don't decide to file overnight."
"If you're choosing Chapter 7, what you're saying is you're going to liquidate," said bankruptcy attorney Dunham Biles. "This company is done."
This week, everything inside the warehouse was auctioned off to help pay creditors, including some of the very backpacks customers said they had already purchased.
According to Biles, whatever money is made from the auction will be divided amongst the creditors. Court filings show Sapphire Sky to have approximately $884,000 in debt, meaning customers will likely receive pennies on the dollar. "This is an unfortunate situation," said Biles, "where unfortunately these people are not likely to receive very much - if anything at all - on their claims."
It's a tough pill to swallow for members of the Facebook group "I Hate Sapphire Sky Boutique LLC." At last check there were more than 900 members, with at least a third saying they are still owed refunds.
"Am I mad? Yes, I'm mad," said Stephanie Faulkner-Puckett. "It's a lesson learned."
"I would love for them to be up front and say, 'hey, we screwed up, and we're not going to do this again,'" said Collier.
That's not enough for Honea. "I hope their family, their friends, heck, all the way to the PTA members of their kids' schools look at them and go, 'what kind of people would do this to hardworking families?'"
CBS News Texas repeatedly reached out to the Allens but did not received a response.
A spokesperson for Loungefly sent us this email:
"We are unable to comment about Sapphire Sky, its business practices and/or financial issues."
Loungefly would not answer questions about when it became aware of the issues with Sapphire Sky, how the company vets distributors, or its message to customers owed money. Many of the customers we interviewed held Loungefly at least partially responsible, saying they would never have bought from Sapphire Sky otherwise.