While signing up for yoga classes might be at the top of most New Year’s resolution lists, a pair of yoga companies ended 2016 with some serious legal issues.
On Dec. 20, startup yoga clothing company Yoga Smoga Inc. filed for Chapter 11 protection in New York after a clash with its largest investor.
Yoga Smoga was founded by siblings Rishi and Tapasya Bali after they left jobs at The Goldman Sachs Group Inc. and Credit Suisse AG to start the company, which billed itself as a rival to yoga clothing juggernaut Lululemon Athletica Inc., which sold a 27.7 percent stake in itself two years ago and resolved a derivatives suit last summer.
Jil Mazer-Marino, a partner with Long Island-based Meyer, Suozzi, English & Klein, and associate Michael Kwiatkowski are advising Yoga Smoga on its restructuring. The firm has not yet filed billing statements with the bankruptcy court.
The Big Apple-based company’s bankruptcy comes after an involuntary Chapter 7 petition was submitted in November to a U.S. bankruptcy court in Manhattan by creditors claiming they were owed more than $3 million. Two of those creditors are Durga Capital LLC and the Ravi Singh 2015 Family Trust, both of which are connected to Ravi Singh, a former chairman of Yoga Smoga’s board of directors.
In a declaration filed last week, Tapasya Bali pointed to a strained cash supply at the company that prevented Yoga Smoga from meeting its payroll obligations. According to a list of Yoga Smoga’s largest unsecured creditors, the company owes $144,700 to Gunderson Dettmer Stough Villeneuve Franklin & Hachigian and $100,287 to Boston-based IP firm Wolf, Greenfield & Sacks for legal services. Public records show that Wolf Greenfield has done trademark work for the debtor. (In September, Wolf Greenfield was also listed as an unsecured creditor in the bankruptcy filing of NJOY Inc., one of the nation’s largest electronic cigarette makers.)
Gunderson Dettmer associate Jennifer Rubnitz, who did not return a request for comment, is listed as the the firm’s contact in Yoga Smoga’s bankruptcy filing. Her profile on professional networking website LinkedIn also identifies her as certified vinyasa yoga instructor.
Yoga Smoga isn’t the only yoga company feeling the heat.
Late last month, a California judge ordered that the income and ownership of Bikram Choudhury’s hot yoga empire, Bikram Yoga Inc., be turned over to his former attorney as a result of a multimillion dollar judgment against him in January 2016.
Minakshi Jafa-Bodden, a British lawyer and former head of legal and international affairs for Bikram Yoga, filed suit in June 2013 against Choudhury in Los Angeles Superior Court. Jafa-Bodden claimed that she was sexually harassed and “abruptly and unlawfully terminated” after she investigated sexual assault allegations against Choudhury earlier that year.
Since 2013, six women have filed civil suits accusing Choudhury of sexual harassment and assault.
Petra Starke, a former counsel at O’Melveny & Myers who served as president and CEO of Bikram Yoga, testified at trial about the alleged abuse. Starke, a one-time deputy associate counsel in the Obama administration and current founder of yoga app Sweat N Glow, detailed instances of degrading and demeaning behavior by Choudhury. (Starke, who joined the company after Jafa-Bodden was dismissed, herself filed a wrongful termination and discrimination suit against Choudhury.)
A year ago this month, a Los Angeles jury found on behalf of Jafa-Bodden and awarded her $6.7 million in damages. But Jafa-Bodden subsequently claimed that Choudhury fled to India and tried to conceal assets that include a fleet of luxury cars and a diamond-encrusted watch.
The trial judge agreed to appoint a receiver with power to seize and sell the yoga guru’s copyrights, trademarks and web domain names, which eventually resulted in Jafa-Bodden taking control of Choudhury’s company.
“Bikram is no longer the boss of Bikram Yoga. I am,” Jafa-Bodden told the U.K.’s Daily Mail on Dec. 31. “I’ve been to hell and back, but the jury has spoken.”
For her representation, Jafa-Bodden turned to Carla Minnard, a name partner at Oakland, California-based Minnard Bosch, and Mark Quigley and Aaron Osten of Santa Monica, California-based Greene Broillet & Wheeler.
Bikram Choudhury turned to Tafoya & Garcia partners Robert Tafoya and David Garcia. Prior to forming the Los Angeles-based firm, Tafoya was a trial lawyer at Akin Gump Strauss Hauer & Feld.