Illustration by Lorenzo Gordon. Photos: Getty

The Rokit Group of Companies, the conflict-prone enterprise conglomerate based by billionaire John Paul DeJoria and his British associate, Jonathan Kendrick, could also be reaching its authorized occasion horizon in a collection of court docket circumstances throughout the U.S.

Last week, the bankruptcy trustee managing the Chapter 7 case of a Rokit subsidiary acquired court docket approval to retain an out of doors regulation agency to “investigate potential litigation claims.”

The transfer by trustee Peter Mastan comes because the collectors’ assembly within the chapter of Able Events, beforehand referred to as Rokit Marketing Inc., was continued final week for the tenth consecutive time since final summer time. It has now been rescheduled for mid-September.

Five years in the past, Rokit put itself on the American sports activities map by getting into right into a collection of high-profile, multimillion-dollar sponsorship offers with skilled groups, together with the NBA’s Houston Rockets, Formula 1’s Williams Racing, and the NFL’s Las Vegas Raiders and Los Angeles Chargers.

But as Sportico has reported, every of those agreements prematurely collapsed after Rokit ceased making good on its funds. This sample of delinquency prolonged to different of its enterprise dealings as effectively: Last month, for instance, a Los Angeles Superior Court jury dominated towards a distinct Rokit subsidiary in a case introduced by a former worker who had sued for breach of contract.

That verdict represented simply the newest authorized setback for Rokit. After the corporate defaulted on its agreements with Williams Racing and the Houston Rockets, these groups individually took Rokit to arbitration and every prevailed with eight-figure rulings that had been later reaffirmed in court docket.

Rokit responded by placing six of its subsidiaries into voluntary chapter, together with the entities that had been events to the workforce sponsorships. Rokit has additionally since filed separate lawsuits towards Team Williams Racing and the Houston Rockets mum or dad firm Fertitta Entertainment, in an effort to invalidate the arbitral rulings.

Enlisting the pugnacious legal professional Larry Klayman, Rokit sued Williams Racing in Florida, the place Klayman is at the moment in good authorized standing. Klayman, who based the conservative authorized group Judicial Watch, was suspended final yr from training regulation in Washington, D.C., after being discovered to have dedicated quite a few moral violations.

Klayman informed Sportico that, on Rokit’s behalf, he has additionally been making an attempt to curiosity the FBI and U.S. Attorney in Houston with allegations of Fertitta Entertainment’s “illegal conduct.” Klayman offered a replica of a letter he says he despatched to federal regulation enforcement officers in March, accusing Fertitta of fraudulently inducing Kendrick and Rokit into sponsoring the Rockets underneath the promise that, underneath a separate beverage settlement, sure portions of Rokit-branded liquor can be bought by Landry’s institutions. Fertitta has argued that this sort of quid-pro-quo association would by no means have been allowed underneath the Texas Alcohol and Beverage Code.

In a quick filed earlier this yr, plaintiff attorneys for Rokit acknowledged that the beverage settlement “did not require (Landry’s) to purchase any certain quantity of products,” and that the quantities would finally be “determined by defendants for each establishment depending on consumer demand for showcased products.”

Fertitta’s legal professional declined to remark, as did spokespeople for the Department of Justice and FBI.

Rokit says it has additionally raised these complaints to Mastan, and expects him to now pursue them within the Able Events chapter.

Able Events initially filed for Chapter 7 in March 2022, with zero belongings and over $70 million in liabilities, most of which associated to potential claims by Team Williams and the Rockets. During the chapter’s earlier collectors’ conferences that happened final summer time, Kendrick acknowledged that Able Events had engaged in sponsorship offers with the sports activities companions to advertise the bigger Rokit model. Despite this, the corporate contends that solely Able Events needs to be held legally liable.

“The Debtor’s bankruptcy does not suggest any ‘legal liability’ by any of the Rokit Group of Companies, Jonathan Kendrick, or John Paul DeJoria, all of whom are well regarded, upstanding members of the business community,” mentioned Able Events’ legal professional Joseph Rothberg, in an e mail to Sportico. 

In a movement final month, Mastan informed the California Central Bankruptcy Court that one of many major causes he wished to retain a basic counsel was to advise him on pursuing avoidance or different claims “belonging to the debtor.”

Mastan didn’t additional specify within the submitting which entities or people he could be concentrating on, and the trustee didn’t reply to requests for remark.

Bruce Markell, a professor of chapter regulation and observe at Northwestern University, mentioned the petition signifies Mastan’s confidence that he’ll prevail in clawing again funds into Able Events’ property—which might then be distributed to collectors. According to the federal chapter guidelines, Chapter 7 trustees and their outdoors counsel obtain a sliding-scale fee from the debtor’s property gross sales, which implies they solely stand to get reimbursed for his or her work if they’re profitable find belongings. 

“Everyone is doing this more or less on the basis that there is going to be something left to pay them with,” Markell mentioned.

Critics of Rokit, together with former workers and enterprise companions who spoke to Sportico, have expressed a want for somebody with subpoena energy to probe the labyrinthine enterprise construction of Kendrick’s and DeJoria’s enterprise. (While DeJoria’s wealth serves because the monetary engine of the corporate, Kendrick is its face; the ROK in Rokit stands for “Return of Kendrick.”) Mastan, who additionally serves as trustee for the companion chapter case of a distinct Rokit subsidiary, Combine Enterprises, now represents these critics’ best hope—and, to that time, Rokit’s greatest risk. 

In January, the chapter court docket decide overseeing Able Events granted the Houston Rockets’ movement to take a Rule 2004 Examination, which entitles an celebration to compel that the debtor to reply questions and produce paperwork on a broad vary of associated monetary issues. In a February movement filed with the court docket, the NBA workforce accused Rokit—its former jersey-patch sponsor—of enjoying a sport of “whac-a-mole” to keep away from having to show over paperwork.

Kendrick has acknowledged that petitioning for chapter safety, Able Events had modified its identify from Rokit Marketing Inc. to maintain it from “reflect(ing) badly on all the other good things that we’re doing in the Rokit Group of Companies.”

When Mastan requested Kendrick final yr for an inventory detailing these different issues the group did, David Neale, one among Able Events’ attorneys, advised that no such doc was producible, drawing umbrage from the trustee.

“This company is spending tens of millions of dollars or entering into tens of millions of dollars of contracts to advertise for these other companies, and I don’t know what they do,” Mastan mentioned.

In an e mail, a Rokit consultant informed Sportico that Kendrick was longing for the creditor’s assembly to renew and was not accountable for the string of postponements. (An legal professional representing the Houston Rockets within the case declined to remark.)

The fitful developments within the Able Events chapter mirror these within the lawsuit filed towards Rokit by former worker Jeff Moses. In August 2018, Moses sued ROK Stars PLC and ROK Drinks LTD claiming breach of contract, fraud and negligent misrepresentation over a 2015 deal for Rokit to accumulate a majority stake in Moses’ wine enterprise, at a purchase order worth of $250,000. Kendrick was initially scheduled to take a seat for a deposition within the case in September of 2021, however his out-of-court testimony was delayed a number of instances, earlier than lastly going down in late February of 2022.

In Kendrick’s deposition, a transcript of which was obtained by Sportico, Moses’ lawyer repeatedly pressed the Rokit chairman in regards to the many various subsidiaries inside his company empire—and Kendrick repeatedly mentioned he didn’t recall the connection between the businesses or who was employed at which of them. For instance, Kendrick mentioned he didn’t know if ROK Stars had an possession stake in ROK Drinks and that he was uncertain in regards to the relationships between ROK Drinks LTD and one other entity, Rokit Drinks. 

Kendrick additionally forged doubt on the concept that he, as chairman of the general group, was really accountable for the subsidiaries. That rivalry was challenged in a separate deposition of former ROK Drinks CEO Alison Kennedy, who mentioned Kendrick was concerned in “everything.”

A jury final month awarded Moses over $500,000 in damages towards the Rokit associates he sued after the decide within the case had beforehand dismissed Moses’ claims towards Kendrick, individually. With curiosity, the whole judgment might be in extra of 1,000,000 {dollars}. Moses declined to remark, and the Rokit consultant mentioned the corporate deliberate to attraction the decision.

Last October, ROK Stars PLC, Rokit Drinks and one other Rokit affiliate, ROK Imports, filed an amended lawsuit towards Fertitta Entertainment and Landry’s Inc. Their unique swimsuit was beforehand dismissed by a U.S. District Court decide in Texas, who allowed the plaintiffs to reassert a few of their unique claims in a brand new criticism. Fertitta and Landry’s have since filed a movement to dismiss the case for good, which is anticipated to be dominated on within the coming months.

Meanwhile, two of Rokit’s principal holding firms—Rokit World Inc. and Rokit World Limited— are pursuing a $149 million lawsuits towards Williams and it principals. That case was initially filed earlier this yr within the U.S. District Court for the Southern District of Florida, however was dismissed with out prejudice for jurisdictional causes, as a lot of the events are overseas. Klayman subsequently refiled the case in Miami Dade County. 

“Florida state court is actually preferable,” Klayman mentioned in an e mail, “as the case will move much more quickly and where discovery can begin immediately after service of process.”

Klayman mentioned a separate criticism towards Williams is “out for service” within the United Kingdom, which Sportico couldn’t independently verify.

As a part of his e mail response to questions, the legal professional warned “not to defame or even disparage my client or his counsel, meaning me. If you know anything about me, this will trigger a lawsuit.”

A Williams spokesman mentioned the F1 constructor was conscious of a “second spurious suit” filed towards it, which it predicted can be “dismissed in due course.”

While the Rockets and Williams Racing proceed their Rokit battles, one other erstwhile Rokit associate, the NFL’s Las Vegas Raiders, declined to hitch the ruckus. The workforce didn’t assert a creditor’s declare within the Arkansas chapter case of one other Rokit subsidiary, Imply Industry Inc.

Previously referred to as ROK Brands, Imply Industry, was the celebration to a 10-year, $60 million sponsorship settlement with the Raiders signed in 2020. But the partnership quickly went south after Rokit didn’t make an preliminary $5.9 million cost. Last June, Imply Industry filed for Chapter 7 in Arkansas, claiming $3.8 million in legal responsibility, virtually $2 million of which it assigned to the Raiders. A spokesperson for the workforce declined to remark as to why it didn’t file a declare by the bar date this January.

Despite its multijurisdictional authorized drama, Rokit has continued to announce new enterprise offers with sports activities companions and others. In the previous six months, the corporate put out press releases publicizing its sponsorship of an Albanian ladies’s soccer workforce, a British motorbike racing workforce, and a bike racing collection within the U.Okay. It additionally prolonged its ambassador association with Ronnie O’Sullivan, one among snooker’s most achieved gamers. (O’Sullivan’s company didn’t reply to a request for remark, and neither did representatives for the opposite new Rokit companions).

In between these sports activities bulletins, Rokit mentioned it had struck an association to pilot out-of-home WiFi networks in cities in Brazil and Albania, with the objective of increasing the providers “throughout Albania, Kosovo, Montenegro and North Macedonia.” 

In 2018, Rokit held a press convention to announce a $5 billion plan to associate with an Indian state‐owned telecommunications firm in creating WiFi hotspots throughout 27 cities of the Asian subcontinent. That undertaking, nevertheless, didn’t go ahead.