Fanatics Drops Lawsuit Against Bolt, Citing Ongoing Partnership
In a significant development, online sports apparel retailer Fanatics has agreed to settle and drop its lawsuit against troubled one-click payments provider Bolt. The settlement comes as Bolt is in the midst of raising a large round of financing, including a ‘cramdown’ threat for its existing investors, and as founder Ryan Breslow attempts to reinstate himself as CEO.
A Frayed Partnership
The partnership between Fanatics and Bolt was one of the key wins that Breslow and Bolt’s then-CEO Maju Kuruvilla lauded back in March 2022. However, by August 2023, the partnership had frayed to the point where Bolt informed Fanatics it was terminating the agreement. Fanatics did not agree to the termination on Bolt’s terms and filed a suit seeking to force Bolt to pay up on what it believed were Bolt’s financial contractual obligations.
Redacted Documents Reveal Limited Details
The suit, seen by TechCrunch, was heavily redacted, so the dollar amounts and the specifics of what Fanatics was alleging Bolt failed to do are not visible in the filing. However, it may have revolved around millions of dollars that Bolt paid into a fund that was to market Fanatics and Bolt’s partnership. Bolt paid $12 million into the fund, and Fanatics was reportedly suing for an additional $50 million.
Bolt’s Controversy Surrounds
The lawsuit between Fanatics and Bolt is just one of several controversies that have surrounded Bolt since landing an $11 billion valuation in 2022. Its outspoken founder, Breslow, stepped down as CEO in early 2022 after allegations that he mislead investors and violated security laws by inflating metrics while fundraising the last time he ran the company.
Bolt’s Turbulent Past
Kuruvilla left the company, reportedly voted out by the board in March, around the time Fanatics filed its lawsuit. Breslow was also embroiled in a legal battle with investor Activant Capital over a $30 million loan that the company granted to Breslow. It was later settled when Breslow agreed to pay back the money and the company agreed to implement better governance guardrails.
New Funding Round Raises Red Flags
Then Bolt shocked the fintech world last month with a leaked term sheet that revealed it is trying to raise $200 million in equity at an even higher valuation, which raises red flags about its financial health. The new funding round includes a ‘cramdown’ clause for existing investors, which has sparked concerns about the company’s ability to pay back its investors.
A New Chapter for Bolt and Fanatics
The settlement between Fanatics and Bolt marks a new chapter in their partnership. However, it remains to be seen whether the settlement will have any impact on Bolt’s financial health or its ability to secure funding from other investors.
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About the Author
Mary Ann Azevedo is a Sr. Reporter at TechCrunch with over 20 years of business reporting and editing experience. She has won numerous awards for her breaking news coverage and holds a Master’s degree in journalism from the University of Texas in Austin.
