The bankruptcy was filed in Nevada Bankruptcy Court. Despite some reports that the company had named another CEO recently, Ryan Drexler, who has headed the company for a number of years, was listed on the bankruptcy documents in that role.
The fling lists the company’s assets at between $10 and $50 million, and puts the liabilities in the same range, too.
Three major creditors are listing in the filing: Emery Tax Efficient, LP, Prestige Capital, and White Winston Select Assets Funds. The filing, which may updated in the near future, did not list dollar amounts as to how much each creditor is owed.
Rapid rise and fall
MusclePharm rose like a meteor in the early 2010s and crashed just as spectacularly. Its products have been sold in more than 100 countries and nationwide in the United States, including Costco and Walmart, as well as through more than 100 online stores, notably, bodybuilding.com and Amazon.
A founding team that included Denver resident and former NFL player Brad Pyatt rapidly built the brand, which featured bold lime green packaging, to annual sales of more than $150 million.
Part of that strategy was to sign up high profile athletes and influencers, including at one time Tiger Woods and Arnold Schwarzenegger.
However, the company failed to keep costs under control, whether as a result of poor business practices or as a matter of subterfuge. In 2015 the Securities and Exchange Commission charged the company with a series of accounting and disclosure violations, including undisclosed payments in funds and in kind services to Pyatt and other executives.
Pyatt was ousted as CEO and agreed to pay a $150,000 fine. The company itself was assessed a $700,000 levy.
Unraveling endorsement contracts
Drexler, a veteran from Country Life Vitamins, who was one of the company’s main shareholders, subsequently took over as CEO. He struggled with unraveling Pyatt’s lavish influencer and athlete endorsement contracts as well as dealing with a lawsuit filed by a contract manufacturing partner.
The brand never really recovered from the debacle, and Drexler was forced to seek outside capital, which reportedly came with some strict conditions. More recently the company was hit by supply chain disruptions brought on the global pandemic.
The company reported $13.1 million in quarterly revenue in its most recent earnings statement, which covered the first quarter of 2022. The filing also included notice of a loss of $2.5 million for the period. It had not reported earnings since then. The company’s stock traded above $2 a share briefly in 2021 but sank below the $1 mark later that year. It was recently trading at between 18 and 22 cents a share before the stock became essentially worthless at the end of November.
Consultant: Having one major retailer was big risk
Consultant Joshua Schall, who was once MusclePharm’s chief strategy officer in its early years of rapid growth, had this to say:
“MusclePharm deteriorated significantly since the early 2010s golden years when I was a part of the sports nutrition brand's hyper growth phase. The fact is, the MusclePharm of today is unrecognizable to the one that I left a decade ago,” he said.
“MusclePharm had key customer risk with one retailer (i.e. Costco) that was at an alarmingly high rate. Costco is an ideal pandemic-era retail partner, especially in the HABA category, but they want operational excellence and consistent pricing strategy. You mix some external challenges (i.e. commodity inflation) with internal problems, and the worst nightmare scenario easily happens.
“This won't be the last we hear about MusclePharm. The company's assets (i.e. intellectual property) still has value in the marketplace, but it will obviously be a shell of its dynamic vibrant lime green MP former self,” Schall added.