Xyience Files For Bankruptcy - Death Threats Made
By Mike MacLeod • Jan 22nd, 2008 • Category: NewsThe Las Vegas Review Journal reports that major sponsor of the UFC, Xyience, 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.
What do you guys think? Will this have a negative impact on the UFC?
Mike MacLeod is an MMA journalist and freelance writer. In addition to his role as Editor at BadManSports.com, Mike is a contributing writer for FiveOuncesOfPain.com
Email this author | All posts by Mike MacLeod
I have been following the Xyience beat for over a year now, and if you really dig deep you will find that there is much more to the story than the Las Vegas Review Journal has reported. The death threats are nothing new, as some of my initial sources received death threats back when I first started covering this whole saga. The involvement of the Fertittas is glossed over in the article, and according to insiders Fertitta Enterprises bought into Xyience only to immediately lock up the Xyience sponsorship contract with the UFC. $6.5 million in fees already owed to the UFC by Xyience was paid by the Fertitta investment along with a huge extension of the sponsorship. This payment and extension was signed and sealed while investors and the general public were told that the latest Xyience investment would facilitate the expansion of the brand. In the Review article, Xyience officials say there wasn’t enough money for expansion. If they didn’t extend their sponsorship with the UFC and use up all the Fertitta investment funds, the company would not be in this position and would not need to go bankrupt. You can find out more by going to my site: http://www.unlimitedfightnews.com/xyiencewow.htm
Rich,
This is a wild story. How has this been kept from the mainstream media for so long?