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More sketchy Xyience / Fertitta links

Sherdog has a wordy article which probably doesn’t make much sense to many people that’s all about Xyience’s bankruptcy case. The simple summation is that the shareholders are accusing the Fertittas (via a company named Zyen) of lending Xyience money that was immediately paid to the UFC rather than, I dunno, to keep the company afloat. Then when Xyience couldn’t make return payments to Zyen, Zyen defaulted on the loan and are trying to seize Xyience’s assets:

“Thereafter, a month later [Xyience] failed to make the very first payment due Zyen in November. The Shareholder Group believes that this failure to pay was simply an orchestrated default. Consequently, Zyen issued its Notice of Strict Foreclosure, which gave it the right to foreclose under an agreement not approved by the shareholders nor in the best interest of [Xyience]. Pursuant to the notice, Zyen sought to foreclose on [Xyience’s] assets, including the trade name Xyience and energy drinks under the trade name of, among other things, Xenergy drinks.”

This is where this story seems to be going into pretty murky legal waters. Because corporate business is infinitely cut throat, I’m not sure if anything illegal has actually happened yet, but it sure looks like they’re cutting a fine line. There seems to be a number of people involved with Xyience and the Fertittas who worked in cahoots to orchestrate this asset snatch, effectively finishing the company off and leaving the investors with nothing.

  • Atom

    I don’t think anyone cares what happesn to Xyience at this point.. just whether or not it will come back to affect the golden brothers of mma, and indirectly, hurt the UFC. (and i’m one of those people it doesn’t make sense to)

    Is Adam Swift basically in charge of translating all mma legalese for the rest of us now? I like his mmapayout blog.

  • fightlinker

    my understanding is that Sherdog uses it’s connections to get all the paperwork to Adam the moment it’s filed, and he translates it for them. The latest stuff is pretty interesting specifically because it shows why the Fertittas sunk more money into Xyience: so that the UFC could collect on sponsorship pay. Then they turned around and called back the loan to Xyience, and are trying to seize the assets. Here’s the math:

    Xyience owes UFC 12 million dollars
    Zyen pays Xyience 12 million dollars
    Xyience pays UFC 12 million dollars
    now Xyience owes Zyen 12 million dollars
    Xyience can’t pay Zyen
    Zyen says Xyience defaults, Zyen seizes 8 million dollars in assets
    Xyience is left with nothing
    UFC didn’t lose any money
    Fertittas only loses 4 million instead of the 12 they were originally supposed to.

    Pretty smart until you realize that if the loan was understood to be for helping keep Xyience alive rather than just going right back into the Fertitta’s pockets) then that opens the possibility of collusion between Zyen, the UFC, and Xyience to screw over the stockholders.

  • Ruggertenthousand

    It seems like a fugazy shell game to me…It is one step above “busting out” the company( Xyience) like the restaurant in Goodfellas or the sporting good store on The Sopranos. The difference here is it is being done by lawyers.

  • Rich Bergeron

    I’m really not sure no laws were broken here. I think that’s up to the federal government to decide. Unfortunately, the real tragedy here is that not many people truly understand how many victims there really are in this. I have been racking my brain on this one, and I’ve realized it might take years to fully quantify exactly how many people were screwed as a result and why. Here’s a short list of injured parties:

    1.) Xyience-sponsored fighters who have yet to be paid. (The UFC paid their own sponsorship but neglected to bring their own fighters current)
    2.) Xyience shareholders locked out by the fraudulent Fertitta foreclosure (I have heard estimates that range between 340 and 380 total shareholders that were burned by this)
    3.) Holders of stakes in the fast plummeting $350 million Zuffa financing package that was obtained through misrepresentation of sponsorship strength. (Between the brokerage houses and individual investors it could take a really long time to find out how many folks got screwed from the get go on this one).
    4.) Xyience employees who were laid off as a result of Xyience paying for sponsorship deals before they doled out anything for actual production, distribution, and salaries.
    5.) Global Cash Access investors who watched their stock take a mid-November nosedive because a bunch of their former employees jumped ship and dumped a ton of their cash in Xyience.
    6.) me, who got sued for $25 million bucks in an attempt to cover up all the bad Xyience press despite the fact that it’s all been true from day one.

    For more, check out my latest blog: