Note: Previous and ongoing coverage of Tough Mudder's difficulties in 2020 can be found here – Who Will Save Tough Mudder? Will TM Disappear in 2020?
[2/21/20] United States Bankruptcy Court For The District Of Delaware: Opposition To Chapter 11 Trustee Motions To Sell Assets Free And Clear And Approve Assumption Of Certain Contract (Case 20-10036-CSS Doc 59 Filed 02/20/20) – PDF
Navy Federal Credit Union (“Creditor”) hereby opposes the Chapter 11 Trustee Motion to Sell Assets Free and Clear and to Approve Assumption of Contracts
“On January 30, 2019, Creditor and Debtor entered into a sponsorship contract (the “Contract”) whereby Debtor was obligated to provide publicity and allow the marketing materials from Creditor at the covered events during 2019 and 2020. As consideration, the Creditor was to provide the marketing materials and personnel at covered events and make a payment of $250,000.00 for each year of events. The second installment of $250,000.00 was paid by Creditor at the beginning of 2020 and covered the entire year of sponsorship in certain locations and races during which the marketing materials and publicity were still required to be provided.
On January 7, 2020, before Debtor could perform on the obligations for 2020, Debtor was forced into an involuntary Chapter 11 bankruptcy. A Trustee was thereafter appointed. Creditor filed its Proof of Claim as claim 6. Judicial Notice is requested under FRE 201. The Trustee filed the Motion seeking Court approval to allow certain assets to be sold to Spartan Race, Inc. (“Spartan”), including some specified contracts and events.
In the Motion, in Schedule 1.1.10, all assumed contracts were listed. The Contract with Creditor was among them. The Trustee also filed a Notice of Assumption at docket 33-2 which also assumed the Contract. The day prior to the deadline to oppose the Motion, Creditor was notified, though its counsel, by email from Spartan’s counsel, that the Contract was not being assumed after all. As a result, Creditor was forced to expedite an opposition out of an abundance of caution given the result this could have on the unsecured class of creditors. At this time, there is no filing with this Court indicating that the assumption of the Contract has been withdrawn.”
From Mud Run Guide's legal expert:
Multiple objections have been filed to the sale by creditors. Most of them are low-dollar and may not make much noise but this one from Navy Federal Credit Union possibly could:
- Trustee says Spartan will assume all open Tough Mudder open contracts
- Spartans lawyers told Navy Federal Credit Union lawyers that it did not include them, informing NFC of this the day before the filing deadline
- Navy Federal Credit Union's lawyers argue that there has been no filing to exclude Spartan from executing their open contract with Tough Mudder for 2020.
- Essentially: “NFC has $250,000 dollars invested in marketing with TM for 2020 and if Spartan is going to hold the events, NFC should be able to get what they paid for.”
Previous and ongoing coverage of Tough Mudder's difficulties in 2020 can be found here – Who Will Save Tough Mudder? Will TM Disappear in 2020?