The Las Vegas Review Journal reports that Xyience, a major sponsor of the UFC, has filed for bankruptcy protection amid claims of intimidation and death threats.
Xyience Inc. has reported $42.3 million in liabilities and only $5.3 million in assets. The voluntary bankruptcy petition, filed on Friday, follows an involuntary petition that was filed January 3 by founder and former CEO Russell Pike and others. The petitions were filed under Chapter 11, which provides protection from creditors while the company reorganizes.
“We’re excited about the opportunity (to reorganize the company), ” he said. “Xyience has a great brand name and has a strong affiliation with the UFC.”
The UFC is among the creditors of Xyience, being owed $12.5 million in unsecured claims and $5.3 million in secured claims. Xyience signed a $15 million sponsorship agreement with the UFC for 2007.
Other than the close relationship Xyience has with the UFC, there is added interest in this story due to the accusations of death threats. As the Review Journal reports:
Sattar said the bankruptcy became necessary when the company was unable to raise $7.5 million more from shareholders.
“Those negotiations, however, were derailed by a campaign of intimidations and threats led by company founder and former CEO Mr. Pike, Terry Cardenas, Ronald Solomon and Rick Klingenberg,” he said.
“Associates of Mr. Pike and Mr. Klingenberg made threats of physical violence against Xyience management and board members and, on at least one occasion, showed up uninvited at the home of one member of management,” Sattar said in bankruptcy court filings.
“Mr. Klingenberg and his brother David Bergstrom stormed into the Xyience office, cornering (Chief Financial Officer) Michael Levy in an office and refusing to allow Mr. Levy to depart until their demands were met,” according to Sattar’s filing.
If their mother wasn’t paid, Klingenberg and Bergstrom said “somebody was going to … get killed,” Sattar said.
They demanded $20,000 “or else they would return the next day with guys who had a 100 percent collection rate,” according to Sattar’s filing.
Xyience was founded in 2004. Sales grew to $20.4 million in 2006, from $109,000 in its first year. Sattar said Xyience encountered financial difficulties because it spent large sums of money on advertising and promotion but couldn’t get the drink distributed in many stores.