Zyen, Zuffa Prevail on Separate Motions in Xyience Bankruptcy Proceeding
Adam Swift Feb 15, 2008
The Xyience bankruptcy proceedings continued Tuesday in U.S.
bankruptcy court in Las Vegas. Judge Mike K. Nakagawa gave final
approval to an additional $2.6 million loan from Zyen, a Fertitta
controlled company, and a licensing agreement with Zuffa, parent
company of the UFC.
Proceeds from the loan will be used to fund the company as it seeks a potential buyer, while the licensing agreement allows the UFC trademark to continue to appear on Xyience products. The agreement was allegedly worth $8 million in revenue to Xyience, according to filings with the court.
Judge Nakagawa acknowledged that the Fertitta-controlled companies
drove "hard bargains," according to a report in the Las Vegas
Review-Journal, but he believed Xyience would be forced to shut
down without the agreements. Attorneys for the unsecured creditors
opposing the loan characterized the transaction as a "lend to own"
strategy on the part of the Fertittas, reported the
Review-Journal.
According to the filings in the case, the original $12 million note was repayable in one year with a 15-percent interest rate and was collateralized by all of Xyience's assets. The terms also allegedly included warrants for 10 percent of capitalization of the company at one cent per share and 50 percent of the company's equity if Xyience failed to repay.
The ruling seemed to clear the way for Xyience's creditors, chiefly Zyen, in the bankruptcy proceeding. Unless a buyer is found, Zyen stands in position to assume ownership of the reorganized company as the largest secured creditor.
The ruling was a setback for the shareholder group, which is contesting the Zyen financing arrangement in the bankruptcy proceeding as well as a separate civil complaint against Xyience, its former officers, Adam Frank and Kirk Sanford, and Key Management in Nevada district court.
The Review-Journal reported that Xyience's attorney told the court that a potential buyer was sitting in the courtroom. When asked, Xyience President Omar Sattar declined to identify the buyer. However, multiple shareholders have suggested that the Fertittas will purchase Xyience.
"We're excited. We're optimistic. The process has gone well," Sattar told the Review-Journal. "We think we can continue to build the brand going forward."
Adam Swift is the Editor of MMAPayout.com and a frequent contributor to Sherdog.com.
Proceeds from the loan will be used to fund the company as it seeks a potential buyer, while the licensing agreement allows the UFC trademark to continue to appear on Xyience products. The agreement was allegedly worth $8 million in revenue to Xyience, according to filings with the court.
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According to the filings in the case, the original $12 million note was repayable in one year with a 15-percent interest rate and was collateralized by all of Xyience's assets. The terms also allegedly included warrants for 10 percent of capitalization of the company at one cent per share and 50 percent of the company's equity if Xyience failed to repay.
The ruling seemed to clear the way for Xyience's creditors, chiefly Zyen, in the bankruptcy proceeding. Unless a buyer is found, Zyen stands in position to assume ownership of the reorganized company as the largest secured creditor.
The ruling was a setback for the shareholder group, which is contesting the Zyen financing arrangement in the bankruptcy proceeding as well as a separate civil complaint against Xyience, its former officers, Adam Frank and Kirk Sanford, and Key Management in Nevada district court.
The Review-Journal reported that Xyience's attorney told the court that a potential buyer was sitting in the courtroom. When asked, Xyience President Omar Sattar declined to identify the buyer. However, multiple shareholders have suggested that the Fertittas will purchase Xyience.
"We're excited. We're optimistic. The process has gone well," Sattar told the Review-Journal. "We think we can continue to build the brand going forward."
Adam Swift is the Editor of MMAPayout.com and a frequent contributor to Sherdog.com.
