US – Vital Pharmaceuticals (VPX), the owner of the Bang Energy drinks brand, has confirmed it was pursuing ‘Chapter 11’ protection in the US state of Florida, a move it claimed would allow it to reorganize and regain market share from domestic rivals.
The filing of bankruptcy comes weeks after the company recently lost a US$293m lawsuit for false advertising to rival Monster Beverage Corp.
Hueston Hennigan partner Moez Kaba, at the time, noted that the jury awarded Monster nearly US$272 million for false advertising.
US$18 million was on claims that Bang interfered with its contracts with retailers for prominent shelf spaces, and US$3 million was on claims that Bang stole trade secrets from former Monster employees it recruited.
A VPX statement said: “This filing is a restorative action to help the company recover from recent challenges, including multiple lawsuits that impacted the Company’s short-term outlook. VPX intends to use the Chapter 11 process to recapitalize and emerge from bankruptcy well-positioned to continue its rapid growth in the beverage market.”
Under the terms of a Chapter 11 filing in the US, the debtor is allowed to continue business operations (subject to the court’s jurisdiction) whilst it reorganizes its affairs and confirms a plan with its creditors.
VPX noted that the filing would have “no impact (on) product availability, customer orders, or operations”.
An additional US$100m has been lent to the company by unnamed “esteemed syndicate lenders” to ensure operations continue uninterrupted, VPX added.
As part of the restructuring process, VPX stated it has the intention to create a new “decentralized direct store distribution (DSD)” network for the Bang Energy brand, which it hopes will enable it to recover to its “pre-Pepsi meteoric annual success”.
The brand was previously distributed by the CSD giant until a relationship breakdown between the two companies ended with VPX CEO Jack Owoc claiming PepsiCo “engaged in a premeditated plan to destroy Bang from day one”. PepsiCo has since bought into another energy drinks company, Celsius Holdings.
In a statement, Owoc vowed to continue fighting Monster Energy and Pepsi. He added that Bang’s new distribution plans will allow the company to return to explosive growth.
In August, speculation was also high that another CSD company – Keurig Dr Pepper (KDP) – was in talks to buy VPX.
Unnamed sources told Bloomberg a deal could be valued at more than US$3bn, although another source said the price would be closer to US$2bn.
KDP went ahead to subsequently poured cold water on the claims and Owoc later confirmed no deal was in the pipeline, adding he “would never sell Bang Energy” for that amount.
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