Xyience Files For Protection from Bankruptcy… and Death Threats

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.

7 COMMENTS
  • The gas station across the street from my house has xyience drinks but i’ve never bought one nor do I know anyone who has.

    Agree or Disagree: Thumb up 0 Thumb down 0

  • Rashad #1 says:

    100% collection rate? thats pretty impressive.. Mike Tyson like collection #’s

    Agree or Disagree: Thumb up 0 Thumb down 0

  • bigfish042 says:

    Good for those bastards at Xyience. I will bet that the top guys at that company didnt lose a penny and all have 5 million dollar homes jets, 5 cars, etc, etc……

    While all the poor guys that invest lose out. So they go bankrupt, so the big guys dont lose anything. Totla bullshit. If someone did get death threats because they ripped off a hard working guy of a lot of money….GOOD for them!!!!

    Agree or Disagree: Thumb up 0 Thumb down 0

  • Jiu-Jitsu Guy says:

    I agree with bigfish. I was offended by this remark:

    “We’re excited about the opportunity (to reorganize the company).”

    Maybe if those losers did a good job in the first place they wouldn’t have been forced into bankruptcy.

    In my opinion, the name Xyience is horrible. Red Bull and Monster sell because they are good, and they also know how to market. No one is going to buy something with a name like that. May sound dumb, but that is reality when you want a 13 year old to buy a product.

    Agree or Disagree: Thumb up 0 Thumb down 0

  • mma blaster says:

    The name Xyience wasn’t the problem JJ Guy, the problem was that they committed the classic corporate blunder. They overextended themselves. They had too much money in advertising and sponsoring, without spending money ensuring they had a good product and good word of mouth.

    Agree or Disagree: Thumb up 0 Thumb down 0

  • Ivan Trembow says:

    The only reason that Xyience didn’t have to shut down a couple of months ago, according to the Wrestling Observer, was because of a $12 million infusion of funds from Lorenzo & Frank Feritta, as well as a $30+ million renewal of Xyience’s sponsorship deal with the UFC. The Fertittas are also listed in the Chapter 11 documents as being creditors for Xyience to the tune of $17.6 million, above and beyond the scope of Xyience’s UFC contract.

    Agree or Disagree: Thumb up 0 Thumb down 0

  • Ivan Trembow says:

    More Fertitta money flows into Xyience, then the same Fertitta money can flow into the UFC and vice-versa: http://www.lvrj.com/business/14309602.html

    Agree or Disagree: Thumb up 0 Thumb down 0

LEAVE A COMMENT!

You must be logged in to post a comment.

Follow 5OZ