First Court Date Set In Tough Mudder Bankruptcy Case

Tough Mudder Bankruptcy Case

We finally have the first date on the judicial calendar for the Tough Mudder Chapter 11 Bankruptcy case.  Chief Judge Christopher S. Sontchi will hear from the parties at a status hearing on Friday, January 24th. The creditors and Joe Desena had hopes to be heard as soon as this week, but were unable to speed up the process.

One of the reasons for the delay could be the Borden Dairy bankruptcy proceedings, which is also being heard in Judge Sontchi’s court.

We will keep you posted with the most up to date information as we cover this industry changing story.

Read the most recent articles, and how we got to this point here.

Will Dean Concedes To Bankruptcy Process – Kyle McLaughlin And Creditors Hopeful For Faster Resolution

Spartan and Tough Mudder Kyle Mclayghlin Joe Desena

This morning Will Dean filed a Notice of Consent To Order For Relief And Appointment of a Chapter 11 Trustee. The motion states that he  “…will cooperate with the trustee to preserve value for the creditors” and that the Board “consents to a sale of the business to Spartan Race Holdings. Inc., via a court approved order.”  This essentially means that Mr. Dean will not fight the recent filings of debtors against Tough Mudder.

Will Dean and the debtors believe this motion removes obstacles which will speed up the process towards a Chapter 11 bankruptcy. This type of bankruptcy will allow Tough Mudder begin to pay debtors, and reopen Tough Mudder for business.

Will told us in an exclusive statement “I am very pleased that we have brought this matter to resolution. I wish Kyle and Joe all the best and am very pleased that the Tough Mudder brand and community will live on. I appreciate it has been a stressful time for all – not least the TMHQ team who I acknowledge have been put through a great deal. I am looking forward to turning my attention back to my new venture and wife and family.”

 

Obstacle Racing Media reached out to Kyle McLaughlin who told us: “Seeing Tough Mudder consent to the bankruptcy process is an encouraging sign, and in my view, an acknowledgment from Will Dean that the community’s voice has been heard: people want to see Tough Mudder continue on, and support the Spartan merger. — With the court’s support, hopefully Tough Mudder will be able to quickly facilitate a return to normal operations. I’ve been blown away by the strength and support of the Tough Mudder and wider OCR communities rallying to support a positive outcome for TM, and assuming Tough Mudder can clear the remaining obstacles in front of it— I think it’ll be back stronger than ever before”

Spartan CEO Joe Desena added that he “has been super impressed with Kyle’s hard work and the community standing with us through all of the legal proceedings.”

We also reached out to a spokesman for the creditors who had “many conversations with Will Dean. The man did the right thing, he apologized, and said he never thought it would go to this.  He really didn’t realize how hurtful is actions were.”

There has already been a petition filed to speed up the normal 21 day process to have a Trustee assigned. All parties involved are hoping the court moves fast to choose a Trustee, and with all parties in agreement, can move toward a sale which will put the company essentially in Joe Desena’s hands. Joe has stated his immediate goal is to “Put Kyle back in charge and get everyone back to work as soon as possible”

Joe Desena and Kyle McLaughlin plan to release a social media post later today with an update.

Will Dean Signs Letter Of Consent

Read the most recent articles, and how we got to this point here.

 

Tough Mudder Sale To Spartan Getting Closer?

Kyle McLaughlin, former CEO of Tough Mudder, wrote Tough Mudder ambassadors with a message of hope this afternoon. The post informs the community that he has been working behind the scenes with Spartan CEO Joe DeSena on a solution to get Tough Mudder back in business.

A week ago, 3 creditors filed an involuntary bankruptcy petition against Tough Mudder. 2 days later Spartan filed “In Support of Emergency Motion of Petitioning Creditors To Appoint A Chapter 11 Trustee”.  This motion asks the court to speed up the process for a 363 sale. It states in part:

“There is significant risk that the value of the Alleged Debtors will evaporate if a sale is not consummated in the near term. Upon appointment of a chapter 11 trustee, Spartan would immediately engage with the trustee to discuss the terms and conditions of the previously negotiated LOI and the framework for a potential section 363 sale. Such potential sale to Spartan may allow previously scheduled Tough Mudder events for the 2020 season to occur, thereby preserving many jobs and providing a return to the Alleged Debtors’ creditors.”

What does this mean for the OCR community: The hope is the judge rules in favor of the bankruptcy, the sale moves forward with Joe as the buyer, and ticket sales get reopened. Then Joe reinstates Kyle and his TMHQ team and we get a full 2020 Tough Mudder season. Our video from Friday explains it a bit further.

Kyle’s complete post is below:

Hey Ambassadors—

Thank you SO much for all the support, love and positive vibes over these past few challenging weeks. I know the lack of information and the drip feed of news reports and rumors must be just as frustrating for you as it is for me.

I’m a volunteer now, and as you’ve seen in the reports, Joe and I have been working diligently on a plan to save Tough Mudder and keep this experience we all love alive.

And the good news is, we’re making progress. There are still several obstacles to overcome, and we’re crossing our fingers that the courts move fast.

But I have hope— and a belief that if we get another crack at this, that the community is going to rally back stronger than ever.

Keep up the #SaveToughMudder posts and stories— it truly has been making a difference.

I’ll leave you with this thought from the one and only Teddy Roosevelt:

“It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.”

Read the most recent articles, and how we got to this point here.

Leaked Tough Mudder Document Sheds Light On Tough Mudder Case

Giles Chater - Managing Director UK Tough Mudder

At 12:50pm EST today a confidential source sent us the resignation letter from Giles Chater, the former head of UK Tough Mudder. One week ago, Giles sent the letter to Will Dean and several staff members listing his reasons for stepping down as Managing Director. The letter alleges Mr. Dean may be the reason the current Spartan acquisition is at an impasse, and paints Will Dean in a negative light.

Giles states in his letter  “Despite management’s best efforts you have refused to pursue one of these paths in good faith and have actively blocked our attempts to act in what we believed to be the best interest of creditors, customers, employees and wider stakeholders” He went on to say that Mr. Dean recently engaged in  “unacceptable behavior including harassment, threats, name-calling and vulgar language.”

According to additional sources we have been working with in the US and UK Offices, Will Dean may be the sole reason Tough Mudder is currently not open for business. They allege Mr. Dean’s behavior has been selfish and erratic, including the recent firing of  board member, Brad Dietz. Mr. Dietz was hired in March of 2019 as a “turnaround specialist” and from everything we’ve been hearing, had Tough Mudder trending in a healthy direction. Firing Mr. Dietz, and other recent alleged behavior caused the remaining board members to step down. This, in addition to several other factors, eventually led Kyle McLaughlin, American Tough Mudder CEO, to resign.

There is still unfinished business on many levels within this ordeal. There are three unpaid vendors who are attempting to put Tough Mudder into involuntary bankruptcy. Their goal was to have the Delaware Bankruptcy Court take the company out of Will Dean’s hands and put it into the hands of a Trustee who will take over the finances. The recent filing by the vendors and an additional filing by Spartan are requesting the courts have the Trustee put Joe in charge. Joe Desena told us his acquisition deal will “Put Kyle McLaughlin and his team back to work as soon as possible on Tough Mudder events”. Joe went on to tell us he hopes the court rule in his favor and said “my deal gets everyone paid, and allows the company to move forward”

Read the complete resignation letter below:

3rd January 2020

TO: CC:

William Dean, Director, TM Ltd Guy Livingstone

Tough Mudder Management Team Tough Mudder London Office Matthew Martin, Pennington Manches Frank Young

Dear Mr Dean

It is with deep regret that I write to inform you that I have no choice but to resign from my position as Managing Director, Europe, effective 12pm GMT today. Please accept this as my formal letter of resignation. In light of my recent experiences with yourself, as Director of TM Ltd, and shareholder(s), I consider my position untenable and feel obligated to resign under the conditions.

You have clearly, and repeatedly, been presented with viable options for preserving Tough Mudder as a going concern. Despite management’s best efforts you have refused to pursue one of these paths in good faith and have actively blocked our attempts to act in what we believed to be the best interest of creditors, customers, employees and wider stakeholders. Both by action and in writing you have refused to engage with multiple requests for governance and direction.

This refusal to engage with me, fulfil your duties as a Director and effectively provide governance to our organisation left me with no choice. Your callous contemptuous attitude towards our creditors, customers and employees is reprehensible. We have a clear duty to prioritise the interests of our creditors and in failing to do so you have placed me in a morally and professionally compromising position – continued occupancy of which may expose me to personal liability I’m unwilling to risk.

On numerous occasions I have witnessed, or been subject to, unacceptable behaviour including harassment, threats, name-calling and vulgar language. Requests to provide a safe working environment free from this behaviour were belittled or ignored.

Watching this business unnecessarily run into the ground has been excruciating. I have remained unwavering in my commitment to our creditors, customers and amazing team this year and resign as an absolute last resort.

I care deeply for this brand and the incredible community which has built up around it. I am truly heartbroken at the suffering this will cause for so many, not least our loyal talented employees and suppliers.

Please be advised I have set an external out-of-office directing people to you.

I reserve all rights and remedies available to me at any time under my employment agreement and applicable law in each case against and with respect to the Company and Director(s).

Giles Chater Managing Director Tough Mudder Ltd.

Read the most recent articles, and how we got to this point here.

Tough Mudder Update – Involuntary Bankruptcy Petition Filed

After a few days of eerie silence on the Tough Mudder front, we have an update.

A quick recap: 4 days ago, Kyle McLaughlin announced had stepped down from his role as CEO of Tough Mudder as of December 30th. Tough Mudder founders Will Dean and Guy Livingstone denied this on a recent podcast, and assured listeners and viewers that “everyone will be back to work on January 2nd”. On the 2nd, we were able to confirm that no staff were present at the Tough Mudder Headquarters in Brooklyn, NY.

This morning in Delaware, three vendors filed a Chapter 11 Bankruptcy Petition against Tough Mudder for monies owed. Valley Builders, Trademarc Associates,  and David Watkins Homes are due a total of $854,558.40. It is our understanding that at least one of these vendors has been building Tough Mudder courses for at least 7 years.

Chapter 11 Bankruptcy does not mean the immediate demise for Tough Mudder. This type of bankruptcy is “a restructuring bankruptcy”. A judge is assigned and begins to assess the terms of the filing. The court then gets to decide who gets paid, and in what order, and the overall future of the company. Airlines have done this historically, as well as many retail brands, which may close several locations in the process, but ultimately stay open for business.

In OCR, we have a very specific circumstance which may keep Tough Mudder alive. That circumstance is Joe Desena and Spartan Race.

Joe Desena told us “We made an offer that was signed by (then President and CEO) Kyle McLaughlin that gave Will and Guy a large payment, got the creditors paid, and kept everyone at Tough Mudder at work. This was before the two equity holders (Will and Guy) decided this was not good enough, and would only approve of the deal if there were able to enrich themselves even more” When asked for disclosure of the amounts offered to Will and Guy, Joe told us ”Let’s say at least 20X the average American salary”

We also asked Joe why he would want to keep his long time rival Tough Mudder in business. “In the early days of this industry, I wanted to kill them” he said. “No one wanted them gone more than me. All I thought about was beating those guys. Now it makes much more sense for us to keep both brands around. Tough Mudder have a healthy business and there is minimal overlap in our customer base. It’s better for the industry.

He went on to tell us that “We have been working hard to keep it OUT of bankruptcy, and were almost there until those two idiots told everyone to essentially  F*ck off , unless we get paid more!

When asked about Active’s possible involvement Joe told us “After lending all the money they have to keep TM alive over the last few years, Active decided a few weeks ago after being insulted, yelled at, threatened, and tortured – that they were not going to play along with these terrorist tactics of Will Dean”

We asked Joe what’s the best outcome for this recent filing. He told us “If the courts move fast and Will and Guy get out of the way, we may be able to save it. We’d love to fire back up registrations and then hire back Kyle and his team to run things. However, I understand people need to find jobs while things are being determined in the courts, so it may not be possible.”

We also reached out Kyle McLaughlin, who prior to stepping down, had access to Tough Mudder’s financials.  He told us “I’m most concerned for the TMHQ team right now — from what I understand they aren’t back to work yet and have been told they may not be paid. I’m still hopeful that there can be a positive resolution of this dispute— there seems to be multiple paths available that save the jobs, pay the vendors and ensure all of the 2020 events happen on schedule”.

We have been reaching out to Will Dean for several days. Our last communication from Will was on January 2nd via email when in response asking for clarity around a topic said “Not as confused as I was when I read your article. Who are your sources? They need shooting… Seriously”

**January 7, 2:40 PM Update – Gary Brewer of TradeMarc Associates told us “We as contractors for Tough Mudder for more than 7 years has always been, and still are, totally devoted to keep Tough Mudder alive and profitable, and get sales reopened soon.”

Read most recent articles, and how we got to this point here.

 

Kyle McLaughlin Steps Down As CEO Of Tough Mudder

Kyle McLaughlin, was hired as Senior VP of North America by Tough Mudder on June 1, 2018. He was named President on February 1 of last year, and then promoted to CEO on July 1. Kyle has been in the event production space for over a decade and spent almost 6 years with New York Road Runners, the company that produces the New York City Marathon.

Towards the end of 2018, Tough Mudder were having a tough time paying their vendors. The previous two years were filled with a massive expansion of products and TV deals. However, there had not been any large return on investment and things were looking grim. To save some cash, the TMX product was shelved and Tough Mudder took away prize money on all events.

2019 seemed to show a turnaround. President Kyle was seen working and communicating with his customers in a way we had never seen by previous leadership. Things appeared to be looking up for one of the frontrunners in the OCR space.

On December 23rd, Tough Mudder tickets were no longer on sale North America. Obstacle Racing Media had sources informing us Kyle had stepped down, and had sent his staff home with uncertainty the offices would reopen.

Tough Mudder Founder Will Dean  denied this fact on a December 29th podcast and made assurances that everyone would be back to work on January 2nd, 2020.

Kyle released this statement to the Tough Mudder ambassador community moments ago.

To the Tough Mudder Community:

Many of you have reached out over the past few days, and after seeing much of the rumors and incorrect information that has been spread—I felt it was an appropriate time to clarify a few things & share a few thanks and thoughts.

I resigned as Chief Executive Officer of Tough Mudder, Inc. on December 20, not because I wanted to, but because I was left with no choice given the circumstances.  My hands had been tied, and I was left without the ability to effectively lead the company or influence a positive outcome of an ongoing negotiation between Tough Mudder’s shareholders and Active Networks. I indicated in my resignation that I’d be open to resuming as CEO if a deal could be reached between the parties to allow Tough Mudder to resume operations. I have been intentionally keeping a low public profile up until this point to try and avoid drawing unnecessary attention and panic to an already complicated situation.

The circumstances of this overall situation are quite complex, and have been the subject of much speculation, conjecture and misinformation over the past few weeks. As I am no longer a Tough Mudder employee, it wouldn’t be appropriate for me to give any more context as to the background or causes. What you should know, is that it was entirely avoidable, is still solvable, and will require parties to put self-interest aside and pursue one of the many paths forward for the greater good.

Tough Mudder had an incredible year, and I couldn’t be prouder of the team I got to work with every day who made that happen. Customer satisfaction was up 27%. Corporate & group sales were up 35%. We had the strongest roster of corporate partners in years, and we were delivering event experiences we all could be proud of. We were on track to be in 25 countries and had ambitious plans in the works for 2020. The team at TMHQ around the world are the best in the business, and my heart is with them as they’re wading through this uncertainty.

2019 would not have been possible without the help of Active Network, who jumped in to help and supported our turnaround plan when times were rough in the end of 2018.  And they’ve been by our side all year as we worked to chart the course for a new Tough Mudder. In addition, countless vendors and partners, some of whom have been with us since the early days, bought in to our plan and worked hand-in-hand on controlling costs and delivering great experiences. Many of them, most of whom are small businesses, are still owed their final payments from 2019 and are waiting with great hope for a positive outcome.

I’ve watched as the keyboard warriors have reacted to the Spartan announcement over the past two weeks, and again—much speculation and fear-mongering has led to a lot of misinformation.  As Will mentioned in the ORM podcast, Joe De Sena and I, along with Tough Mudder’s board and advisors, were working on a merger plan, keeping Tough Mudder fully intact as-is with the same team delivering the same experiences. All of the tickets would have been delivered, all of the vendors satisfied, and jobs preserved. As Will and Joe have both said in interviews—it’s the right thing to help the industry thrive in the long run, and my thanks to the Spartan team who’ve stuck with TM through this process.

Tough Mudder has always been about overcoming obstacles, together as a team. Only a very few people have the power to influence the outcome of this situation, but for the rest of us—we should do what we do best:  support each other through difficult challenges, leave no one behind, and give every moment our honest best, not our settled best.

My recommendation?  Be patient. Don’t spread misinformation & don’t take every little tidbit you hear on face value. Support the TMHQ team, who needs this community’s strength right now. And use your voice, your accounts, your handles and your forums to tell your Tough Mudder story and show everyone that the world is a better place with Tough Mudder in it.

Clear eyes. Full hearts.

Kyle

Kyle McLaughlin Quits

Read all of the Tough Mudder latest here.