Tough Mudder Troubles – Ongoing Coverage

Editor's Note: This article is a work-in-progress, and we'll post updates as we dig deeper and more news becomes available. We are in touch with all parties involved and will share pertinent details along the way – please check back here for updates.

Updates

1/15/20:

Will Dean Relents

United States Bankruptcy Court, Delaware: Notice of Consent as Majority Shareholder to Order for Relief and Appointment of a Chapter 11 Trustee (download PDF). Filed by William Dean.

By consenting to the order for Relief and Appointment of a Chapter 11 Trustee, Tough Mudder Co-Founder and majority shareholder, Will Dean, will not obstruct the Emergency Motion for Appointment of Chapter 11 Trustee in regards to Chapter 11 Involuntary Petition which was filed on 1/7.

Joe & Kyle Keep Working on Spartan / TM Deal

In a Facebook video post, Spartan co-founder Joe De Sena and Former TM CEO, Kyle McLaughlin share their “around the clock” work to save Tough Mudder and ask the TM community to “stick with us, this isn't over yet!

1/9/20:

United States Bankruptcy Court, Delaware: Spartan files statement in support of an emergency motion of petitioning creditors to appoint a Chapter 11 trustee.

“Spartan is frustrated that Tough Mudder abruptly stopped negotiations towards a sale transaction consistent with the LOI, and is very concerned that the value of the Alleged Debtors’ global business is quickly evaporating. While Spartan is also concerned about the negative impact on value that may result from a contested involuntary chapter 11 petition, it appears there may be no alternative for Tough Mudder. Notwithstanding these significant concerns, Spartan remains interested in certain Tough Mudder assets, and would be willing to consummate a transaction through a bankruptcy court proceeding, subject to limited diligence, reaching definitive agreements, and entry of an acceptable sale order to consummate the transaction. At this juncture, it appears that the best alternative for Tough Mudder is the appointment of a chapter 11 trustee as it will allow Tough Mudder to maximize value for the benefit of all stakeholders through an immediate sale of the Alleged Debtors’ assets.” – Tough_Mudder_Incorporated__debke-20-10036__0011.0 (PDF)

1/8/20:

United States Bankruptcy Court, Delaware: Summons Service Executed on Tough Mudder Incorporated. Case #1:20-bk-10036

1/7/20:

United States Bankruptcy Court, Delaware: Several of Tough Mudder Incorporated (TMI) creditors have filed for a Chapter 11 Involuntary Petition and Emergency Motion for Appointment of Chapter 11 Trustee. (PDF Downloads or see screenshot below)

$854,558,40 owed for “services rendered”:

  • Valley Builders $307,189.53
  • Trademarc Associates, Inc. $292, 454.93
  • David Watkins Homes, Inc. $256,014.75

We reached out to our legal expert to provide some insight: “This emergency petition for appointing a trustee for the bankruptcy to shorten the response time. The petition is sealed, but the gist is they are trying to force TM's hand – fast.”

1/3/20:

“Tough Mudder has always been about overcoming obstacles, together as a team. Only a very few people have the power to influence the outcome of this situation, but for the rest of us—we should do what we do best: support each other through difficult challenges, leave no one behind, and give every moment our honest best, not our settled best.” – Former TM CEO, Kyle McLaughlin

1/2/20:

  • We've added the response from an Active spokesperson.
  • Guy Livingstone's lawsuit against Tough Mudder Incorporated has been extended until 3/13/20, as of December 20 (the same day Kyle McLaughlin was removed as CEO of TMI), Tough Mudder's attorney, Jed Weiss, filed a motion to withdraw as representative of TMI.
  • (see screenshot below) Tough Mudder Canada has filed a notice of intention to file bankruptcy, listing $0 in liabilities and $0 in assets.
  • We reached out to Will Dean earlier today via email regarding online comments relating to US & UK offices closing, US bankruptcy, and employees being let go as of 1/1/20; his reply was “no comment”.

Will There Even Be A Tough Mudder in 2020?

(12/30/19) The news that Spartan and Tough Mudder had come to terms to take over German and Canadian TM events en route to a full takeover of all Tough Mudder events worldwide may have been a bit premature, and there are signs and rumors of this deal rapidly falling apart. Right now, it appears the two parties are stuck in a stalemate over the future of TM, and that points to some extremely bad news for the athletes in the world of OCR that love Tough Mudder events.

  • With Tough Mudder's registration currently closed during one of the busiest shopping months of the year, there are currently no positive signs of life at TM.
  • We've also verified that on December 20, Kyle McLaughlin was removed as CEO of TMI, with the day-to-day CEO duties falling back to co-founders Will Dean and Guy Livingstone
    • We've reached out to Kyle to provide some insight and will update should he choose to.
  • Active (active.com) has reportedly invested over $30 million in Tough Mudder since 2017 ($15 million in 2017, $18 million through early 2018) and any “deal” for TM should activate clauses, causing payments to come due.

“Since late 2018, as a service provider to Tough Mudder, Active Network has supported its financial restructuring and turnaround efforts. Occasionally merchants like Tough Mudder are unsuccessful in turnarounds. Active Network has unfortunately been placed in the middle of disputes that have nothing to do with us. We remain steadfast in our commitment to the Active community of event participants, organizers and customers. This matter is immaterial to us.” –  Active spokesperson

If you add the above bullet points together, without money coming in through additional investment or outside acquisition and no event registrations, something drastic would have to happen – extremely soon – for Tough Mudder to exist in 2020. Of course, this is a fluid situation that could potentially be resolved quickly through renewed investment and while the situation looks dire we're not prematurely calling Tough Mudder down for the count.

Should Tough Mudder Survive?

Here's the part that's on YOU, the OCR athlete – DO YOU EVEN CARE?

Tough Mudder was one of the first events I participated in back in 2011 when I was writing Ultimate Obstacle Race Training and I've happily slogged through the mud at other TM's over the years, and even froze my butt off at WTM in 2015. Personally, I like Tough Mudder and their huge obstacles that reward camaraderie and foster the community to participate in an event – not a “race”.

What do you think?

We'd love your input as to why Tough Mudder should be saved, share some stories of what Tough Mudder means to you and why you'd like to see it survive (or not) in the comments below. We'd also like your input on a Facebook post:

  • Should Active continue to bail out Tough Mudder?
  • Are you OK with TM going away altogether?
  • Is Spartan the best hope for keeping the Tough Mudder brand alive?
  • Can the OCR community help put the pieces back together?

Whose “Fault” is it?

An inevitable question – it helps us make sense of a situation by placing blame… Was it the same hubris that drove Tough Mudder to greatness that is also standing in the way of Spartan being able to save the brand? Only time will tell.

Let's also remember that Spartan just “bailed out” Warrior Dash, so they have a track record of developing a partnership that allows the previous owners some dignity while they help to rebuild a brand in-house. Whether you agree or disagree with Spartan owning multiple events from all over the world of OCR – if they didn't step in to cushion WD's fall, who would've?

What can we do as a community?

  • Create a signature campaign to appeal to Active
  • Send emails to Will Dean
  • Social posts to appeal to Spartan to try and sweeten the deal
  • Help find another source of funding – got a piggy bank to smash?

Let's also remember that when other events such as Warrior Dash and BattleFrog went under, events such as Spartan Race, Savage Race, Rugged Maniac and others stepped up and offered free entries to those affected. Some of those events even hired employees who found themselves out of a gig, so there's a strong foundation for community support.

Who Loses?

When events fail, the first social posts we see are, well, kinda selfish: “What about MY registration? THEY STOLE MY MONEY!” and while no one can blame the athletes that individually lost $100 or more for a single registration, let's remember who really gets hosed when an event crashes & burns:

  • Vendors – from t-shirts to port-o-johns, the vendors are left holding the bag for tens of thousands of dollars for services or goods rendered that they will most likely never recoup.
  • Investors – “Want to know how to make $1 million in OCR events? Start with $2 million”
  • Employees – It really sucks to pour your heart and soul into an event and watch it die around you – not only are you most likely unpaid for the last (few) paychecks, you've got to say goodbye to all your friends and start over at a new job – once you find one.

More to Come…

Stay tuned, we'll update this post as new information comes in and we'll keep digging.

 

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