Power Balance LLC, a Lake Forest company that made a big splash linking its performance bracelets to professional athletes, has filed for protection in federal bankruptcy court in Santa Ana.
The filing is the result of numerous lawsuits that allege misleading advertising about the hologram-embedded rubber bracelets and the company will continue to operate during reorganization, Power Balance said in a prepared statement.
Spokesman Chris Thonis said Power Balance recently settled one lawsuit for $1 million and that reports seemingly originating with TMZ that the settlement was for $57.4 million are incorrect.
The company, incorporated in Delaware, has assets of less than $10 million and debts of $10 million to $50 million, according to court filings. Among the biggest creditors are the Los Angeles Kings Hockey Club, $250,491; Sacramento Kings basketball team, $100,000; and entities representing Los Angeles Lakersforward Kobe Bryant, $400,000; pro skateboarder Ryan Sheckler, $25,000; Clippers center Blake Griffin, $20,000, among others.
In a prepared statement released Tuesday the company said:
"Due to the unauthorized marketing tactics of an independent distributor in Australia and the proliferation of counterfeit operations of which we obviously have no control, Power Balance has become the target of number of class action lawsuits. Although we find the lawsuits to be baseless, they have cost the company millions of dollars in legal fees and continue to threaten the core business. The company has gone through extensive efforts to ensure that its marketing messages are supportable and compliant with local laws. However, lawsuits continue to surface against Power Balance at a tremendous cost to the organization.
"Power Balance cannot wait for these issues to resolve themselves or to go away. After many months of extensive legal analysis and exhaustive research, the company has determined that the only viable option at this time is to seek assistance available to us through bankruptcy laws and the protection of the courts."