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.
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