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After a tumultuous 2016, digital sports network Scout Media Inc. filed for bankruptcy in New York late last week, citing plans to sell the remainder of its business at auction next month.
Scout, which operates a sports blog network aimed at men’s interests covering topics like football, fishing and hunting, filed for Chapter 11 protection on Dec. 8. In order to continue funding its operations, the company is asking a U.S. bankruptcy court judge to grant it immediate access to $6.2 million from private debt fund Multiplier Capital LP.
Womble Carlyle Sandridge & Rice bankruptcy and creditors’ rights partner Matthew Ward in Wilmington, Delaware, is advising Scout in its Chapter 11 case. Ward is leading a team from the Winston-Salem, North Carolina-based Am Law 100 firm, which has not yet filed billing statements with the bankruptcy court. The debtor lists assets and liabilities between $10 million and $50 million. Scout’s bankruptcy filing came on the heels of an involuntary Chapter 11 petition from three vendors claiming that it owed them close $800,000 for unpaid services.
Also named on a list of Scout’s 30 largest unsecured creditors are Silicon Valley stalwart Wilson Sonsini Goodrich & Rosati and New York’s Friedman Kaplan Seiler & Adelman, both of which are owed $356,799.76 and $150,000, respectively, by the sports blog network for legal services.
In a declaration in support of the company’s Chapter 11 case, Scout president Craig Amazeen blamed “a perfect storm of an unsustainable balance sheet,” along with the departure this summer of the company’s then-CEO James Heckman Jr., as leaving it with no other option other than to quickly offload its network to a new buyer.
Court documents show that New York-based Scout has been exploring the possibility of a sale since September but is it has had no formal takeover offers.
Heckman founded Scout.com and then sold it for $60 million in 2005 to Fox Sports. In 2013, North American Membership Group, another network of publications led by Heckman, repurchased the company for an undisclosed sum. But in July 2016, the New York Post reported that Heckman was unceremoniously fired from his position by Scout’s board of directors, led by Russian investors including telecom executive Ivan Vladimirovich Tavrin.
The ouster of Heckman ultimately led to a mass resignation of the company’s production team. Amazeen’s declaration states that Scout believes “its former [CEO] may have breached duties owed to the company that contributed to the near term prospect of inadequate liquidity.”
Since his firing, Heckman has denied any wrongdoing. Davis Wright Tremaine deputy litigation chair Hugh McCullough and partner Brad Fisher in Seattle have filed appearances in the bankruptcy court on behalf of Heckman. Fisher has previously represented Scout in litigation.
Court filings show that Chipman Brown Cicero & Cole, a firm with offices in Delaware and New York, and Los Angeles-based Levy, Small & Lallas are advising Multiplier Capital.