Report: Bracelet manufacturer bankrupt
A California-based performance bracelet manufacturer with ties to some of the biggest names in sports has filed for protection in federal bankruptcy court in the wake of false advertisement claims.
Power Balance LLC, which lists NBA superstar Kobe Bryant as one of its biggest creditors, filed for protection in California this week amid accusations of misleading advertising related to its popular hologram-embedded sports bracelet, The Orange County Register reported.
The bracelets, according to the company's website, "blend the powers of Eastern Philosophy and Western Science with Innovative Technologies" and are designed to "improve and enhance people's lives."
But Power Balance last year was forced to admit their claims of improved performance were not based on scientific evidence after Australian regulators blasted the product as a sham.
The Australian Competition and Consumer Commission (ACCC) last December ordered Power Balance Australia to cease marketing the wristbands and demanded the firm refund people already duped by the purported benefits, the Herald Sun reported nearly a year ago.
The ACCC report led to an onslaught of lawsuits, eventually leading to a recent $1 million settlement, Power Balance spokesman Chris Thonis told The Register, denying an earlier TMZ report that the settlement had been $57.4 million.
Power Balance issued a statement Tuesday, calling the lawsuits "baseless," and placed blame for the alleged false advertising on unauthorized claims by an Australian distributor of the bracelets.
"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," the statement read.
"The company has gone through extensive efforts to ensure that its marketing messages are supportable and compliant with local laws. 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."
According to the company's bankruptcy filing, Bryant, who is currently locked out of his more than $25 million Lakers salary due to the league's labor impasse, is owed $400,000 from Power Balance as part of his endorsement deal with the company.
The Sacramento Kings, who awarded Power Balance the naming rights to its home arena in March, are owed $100,000, while the NHL's Los Angeles Kings are listed as a $250,000 creditor.
Power Balance reported its assets to be in the $1 million to $10 million range, with debts of $10 million to $50 million.
The five-year-old company -- whose bracelets sell for $30 -- is linked to some of sports biggest stars including, Shaquille O'Neal, Blake Griffin, Drew Brees, Matt Kemp and Dustin Pedroia.