Bankruptcy Judge Mike Nakagawa is expected to sign an order within a few days approving post-bankruptcy financing for Xyience Inc., a Las Vegas-based energy-drink maker.
Nakagawa held a hearing Wednesday and agreed to allow Zyen, a company controlled by the Fertitta family, to make a $1 million emergency loan. Zyen can increase the loan to $2.6 million in the hopes Xyience can be sold within 75 days.
Greg Garman, an attorney for Zyen, said he will prepare an order for the judge to consider signing. Zyen already has $12.5 million in unsecured claims against Xyience and a $5.3 million secured claim against the company.
The energy drink company’s product, Xenergy, is a key sponsor for the Ultimate Fighting Championship, a mixed martial arts company owned by brothers Frank and Lorenzo Fertitta.
The energy drink company is sold in 24,000 grocery and convenience stories around the country, president Omer Sattar said in an e-mail. However, Xyience has had difficulty in expanding the stores that carry its products while spending large amounts of money on advertising, Sattar said.
The company signed a $15 million sponsorship contract with UFC for 2007. Other creditors include MTV Networks, the Travel Channel, MDK Motor Sports and Professional Bull Riders.
Adam Frank of Las Vegas, who owns 4.45 million shares of Xyience stock, joined the company in June as interim general manager. At the same time, Kirk Sanford was named special adviser to management. Sanford last year resigned as CEO at Global Cash Access, a Las Vegas company that operates automated teller machines in casinos.
“Employee morale is not good, and Xyience critics have emerged among the UFC community,” Sattar said in a Jan. 18 statement filed with bankruptcy court. Several dissident shareholders complained during the bankruptcy court hearing Wednesday.
Xyience also has been involved in disputes with founder and former CEO Russell Pike, whom Sattar accused of using strong-arm tactics to get payments.
Pike was among those filing an involuntary bankruptcy case against Xyience early this month before the company filed a voluntary Chapter 11 petition for bankruptcy.
Under Chapter 11, companies are allowed to reorganize so that they can settle claims from creditors and continue in business.
Contact reporter John G. Edwards at email@example.com or (702) 383-0420.