Mud Run, OCR, Obstacle Course Race & Ninja Warrior Guide

Who Will Save Tough Mudder? Ongoing Coverage

Brett Stewart

Spartan & Tough Mudder – Ongoing Coverage

Editor's Note: This article is a work-in-progress, and we'll post updates as we dig deeper and more news becomes available. We are in touch with all parties involved and will share pertinent details along the way – please check back here for updates.

Updates

2/27/20

It's been a big week for Spartan and Tough Mudder. We've learned that the sale of Tough Mudder to Spartan was moving forward and would be completed sometime this week. Yesterday, we announced that the OCR community wouldn't have to wait long to find out the new Tough Mudder Schedule.

And not waiting long is correct! The sale closed today and Spartan announced their plan for Tough Mudder's 2020 events. Here is the 2020 Tough Mudder schedule. Registration has now opened for the following events:

2/25/20

Tough Mudder's sale to Spartan is moving forward! Spartan will purchase Tough Mudder's US operations for $700k and assume any remaining liabilities, rumored to be in the $7-10 million range. Previous objections by Navy Federal have been resolved, allowing the sale to move forward. Navy Federal will continue as a sponsor for any remaining races in 2020 and have the option to continue sponsoring any additional races. The sale will close on February 28th, assuming all financial transactions go through.

You can read the entire legal filing here.

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:

2/12/20

Spartan Acquires Tough Mudder UK

“We’re proud to welcome Tough Mudder UK to the Spartan brand umbrella,” said Spartan Founder and CEO Joe De Sena. “The company’s dedicated team has built an incredible, passionate community and we’re excited to support their efforts to continue to transform lives.” 

Spartan is still actively engaged in discussions with the Trustee managing Tough Mudder US through its Chapter 11 bankruptcy proceedings and have reached a deal that is now subject to court approval. Spartan is in active discussions to engage some former Tough Mudder US employees, with an aim to stand up as many US events as possible after the sale of the Tough Mudder US assets in its Chapter 11 case, which could be completed within the month.

2/9/20

United States Bankruptcy Court, Delaware: NOTICE OF ASSUMPTION AND ASSIGNMENT OF CERTAIN EVENTS AND EXECUTORY CONTRACTS AND PROPOSED CURE AMOUNTS (PDF)

Overview with analysis from our legal expert:

This is a request to the court-appointed trustee of Tough Mudder Incorporated for Spartan to purchase all Tough Mudder assets. A meeting with the trustee in court is scheduled for 2/25 to approve or refute the sale, with an objection deadline set for Thursday, February 20 at 4:00 pm ET.

The purchase price is approximately 700 thousand plus the clearing of all TM debt (estimated at 7.5 to 10 million)

From the Notice of Assumption: “Assumed Liabilities. The Buyer will assume the Assumed Liabilities, which include (i) Seller’s obligations to natural persons holding event registrations associated with an Assumed Event, (ii) for each of the Excluded Events, Buyer will exchange any natural person’s event registration for two comparable Buyer event registrations to occur on or before December 31, 2021, (iii) for every 2020 Tough Mudder Season Pass held by a natural person, Buyer will exchange their 2020 Tough Mudder Season Pass for two consecutive years (i.e., 2020-2021) of a comparable Buyer season pass, (iv) all Liabilities of Seller under each Assumed Contract, in each case, arising after the Closing (v) all Cure Claims, (vi) all Liabilities arising out of Buyer’s use of the Acquired Assets by Buyer after the Closing to the extent such Liabilities arise solely out of any matter, occurrence, action, omission or circumstance that first occurred or existed after the Closing.”

If the sale is approved by the court on 2/25 the sale will become final on 2/28. There will still be a meeting in March to address the payment of any outstanding contracts and the repayment of the 7.5 to 10 million)

(i), (ii), and (iii) above appear to be referring to Spartan offering multiple Spartan (or Spartan-controlled Tough Mudder) registrations for holders of 2020 Tough Mudder registrations or season's passes.

1/29/20

Tough Mudder UK and Germany have resumed operations and online ticket sales are now open.

A text from From Spartan's Joe De Sena this morning: “We got ticket sales open in Europe – now we're working on US!”

1/27/20

Sports Business Daily: Tough Mudder’s European subsidiary resumes operations as administrators appointed

“Spartan remains the most likely buyer for the US and European parts of the business, provided the US business resumes operations soon. A separate sale of the European affiliate would be complicated by the fact that the Tough Mudder brand and its intellectual property is controlled by the US branch.”

1/22/20

Delaware Bankruptcy Court – “status meeting adjourned”

This usually means a deal is on the table and the court is allowing both sides to see if they can come to a deal. We reached out to Spartan’s Joe De Sena:

“Long road still ahead but we are trying everything we can. Right now we are working around the clock to try and get ticket sales turned back on.”

Reading between the lines, the Spartan / Tough Mudder deal looks to be heating up.

We’ve also been made aware of an offer being tendered by another national OCR company – so maybe Spartan has some competition?

1/21/2020, United States Bankruptcy Court, Delaware:

A. Tough Mudder Incorporated and Tough Mudder Event Production Incorporated have consented to involuntary Chapter 11 relief and The United States Bankruptcy Court for the District of Deleware has granted Involuntary Chapter 11 relief for the creditors (download PDF).

B. Tough Mudder Incorporated and Tough Mudder Event Production Incorporated have been directed for the immediate appointment of a chapter 11 trustee (download PDF).

(from Case 20-10036-CSS Doc 18 Filed 01/21/20)

  • ORDERED, that the United States Trustee shall promptly appoint a Chapter 11 Trustee in the captioned involuntary chapter 11 cases.
  • ORDERED, that the Chapter 11 Trustee shall manage the operations of the Alleged Debtors and develop a restructuring or sale strategy, whichever is in the best interests of the creditors of the Alleged Debtors.
  • ORDERED, that the Chapter 11 Trustee may negotiate a sale of the Alleged Debtors’ assets, subject to Court approval and higher and better offers.

– read complete article

1/15/20:

Will Dean Relents

United States Bankruptcy Court, Delaware: Notice of Consent as Majority Shareholder to Order for Relief and Appointment of a Chapter 11 Trustee (download PDF). Filed by William Dean.

By consenting to the order for Relief and Appointment of a Chapter 11 Trustee, Tough Mudder Co-Founder and majority shareholder, Will Dean, will not obstruct the Emergency Motion for Appointment of Chapter 11 Trustee in regards to Chapter 11 Involuntary Petition which was filed on 1/7.

Joe & Kyle Keep Working on Spartan / TM Deal

In a Facebook video post, Spartan co-founder Joe De Sena and Former TM CEO, Kyle McLaughlin share their “around the clock” work to save Tough Mudder and ask the TM community to “stick with us, this isn't over yet!“

1/9/20:

United States Bankruptcy Court, Delaware: Spartan files statement in support of an emergency motion of petitioning creditors to appoint a Chapter 11 trustee.

“Spartan is frustrated that Tough Mudder abruptly stopped negotiations towards a sale transaction consistent with the LOI, and is very concerned that the value of the Alleged Debtors’ global business is quickly evaporating. While Spartan is also concerned about the negative impact on value that may result from a contested involuntary chapter 11 petition, it appears there may be no alternative for Tough Mudder. Notwithstanding these significant concerns, Spartan remains interested in certain Tough Mudder assets, and would be willing to consummate a transaction through a bankruptcy court proceeding, subject to limited diligence, reaching definitive agreements, and entry of an acceptable sale order to consummate the transaction. At this juncture, it appears that the best alternative for Tough Mudder is the appointment of a chapter 11 trustee as it will allow Tough Mudder to maximize value for the benefit of all stakeholders through an immediate sale of the Alleged Debtors’ assets.” – Tough_Mudder_Incorporated__debke-20-10036__0011.0 (PDF)

1/8/20:

United States Bankruptcy Court, Delaware: Summons Service Executed on Tough Mudder Incorporated. Case #1:20-bk-10036

1/7/20:

United States Bankruptcy Court, Delaware: Several of Tough Mudder Incorporated (TMI) creditors have filed for a Chapter 11 Involuntary Petition and Emergency Motion for Appointment of Chapter 11 Trustee. (PDF Downloads or see screenshot below)

$854,558.40 owed for “services rendered”:

We reached out to our legal expert to provide some insight: “This emergency petition for appointing a trustee for the bankruptcy to shorten the response time. The petition is sealed, but the gist is they are trying to force TM's hand – fast.”

1/3/20:

“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.” – Former TM CEO, Kyle McLaughlin

1/2/20:

Will There Even Be A Tough Mudder in 2020?

(12/30/19) The news that Spartan and Tough Mudder had come to terms to take over German and Canadian TM events en route to a full takeover of all Tough Mudder events worldwide may have been a bit premature, and there are signs and rumors of this deal rapidly falling apart. Right now, it appears the two parties are stuck in a stalemate over the future of TM, and that points to some extremely bad news for the athletes in the world of OCR that love Tough Mudder events.

“Since late 2018, as a service provider to Tough Mudder, Active Network has supported its financial restructuring and turnaround efforts. Occasionally merchants like Tough Mudder are unsuccessful in turnarounds. Active Network has unfortunately been placed in the middle of disputes that have nothing to do with us. We remain steadfast in our commitment to the Active community of event participants, organizers and customers. This matter is immaterial to us.” –  Active spokesperson

If you add the above bullet points together, without money coming in through additional investment or outside acquisition and no event registrations, something drastic would have to happen – extremely soon – for Tough Mudder to exist in 2020. Of course, this is a fluid situation that could potentially be resolved quickly through renewed investment and while the situation looks dire we're not prematurely calling Tough Mudder down for the count.

Should Tough Mudder Survive?

Here's the part that's on YOU, the OCR athlete – DO YOU EVEN CARE?

Tough Mudder was one of the first events I participated in back in 2011 when I was writing Ultimate Obstacle Race Training and I've happily slogged through the mud at other TM's over the years, and even froze my butt off at WTM in 2015. Personally, I like Tough Mudder and their huge obstacles that reward camaraderie and foster the community to participate in an event – not a “race”.

What do you think?

We'd love your input as to why Tough Mudder should be saved, share some stories of what Tough Mudder means to you and why you'd like to see it survive (or not) in the comments below. We'd also like your input on a Facebook post:

Whose “Fault” is it?

An inevitable question – it helps us make sense of a situation by placing blame… Was it the same hubris that drove Tough Mudder to greatness that is also standing in the way of Spartan being able to save the brand? Only time will tell.

Let's also remember that Spartan just “bailed out” Warrior Dash, so they have a track record of developing a partnership that allows the previous owners some dignity while they help to rebuild a brand in-house. Whether you agree or disagree with Spartan owning multiple events from all over the world of OCR – if they didn't step in to cushion WD's fall, who would've?

What can we do as a community?

Let's also remember that when other events such as Warrior Dash and BattleFrog went under, events such as Spartan Race, Savage Race, Rugged Maniac and others stepped up and offered free entries to those affected. Some of those events even hired employees who found themselves out of a gig, so there's a strong foundation for community support.

Who Loses?

When events fail, the first social posts we see are, well, kinda selfish: “What about MY registration? THEY STOLE MY MONEY!” and while no one can blame the athletes that individually lost $100 or more for a single registration, let's remember who really gets hosed when an event crashes & burns:

More to Come…

Stay tuned, we'll update this post as new information comes in and we'll keep digging.

 

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