Rokit’s Defense Shield Tested as Bankruptcy Trustee Lawyers Up

The Rokit Group of Companies, the conflict-prone business conglomerate founded by billionaire John Paul DeJoria and his British partner, Jonathan Kendrick, may be reaching its legal event horizon in a series of court cases across the U.S.

Last week, the bankruptcy trustee managing the Chapter 7 case of a Rokit subsidiary received court approval to retain an outside law firm to “investigate potential litigation claims.”

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The move by trustee Peter Mastan comes as the creditors’ meeting in the bankruptcy of Able Events, previously known as Rokit Marketing Inc., was continued last week for the 10th consecutive time since last summer. It has now been rescheduled for mid-September.

Five years ago, Rokit put itself on the American sports map by entering into a series of high-profile, multimillion-dollar sponsorship deals with professional teams, including 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, each of these agreements prematurely collapsed after Rokit ceased making good on its payments. This pattern of delinquency extended to other of its business dealings as well: Last month, for example, a Los Angeles Superior Court jury ruled against a different Rokit subsidiary in a case brought by a former employee who had sued for breach of contract.

That verdict represented just the latest legal setback for Rokit. After the company defaulted on its agreements with Williams Racing and the Houston Rockets, those teams separately took Rokit to arbitration and each prevailed with eight-figure rulings that were later reaffirmed in court.

Rokit responded by putting six of its subsidiaries into voluntary bankruptcy, including the entities that were parties to the team sponsorships. Rokit has also since filed separate lawsuits against Team Williams Racing and the Houston Rockets parent company Fertitta Entertainment, in an effort to invalidate the arbitral rulings.

Enlisting the pugnacious attorney Larry Klayman, Rokit sued Williams Racing in Florida, where Klayman is currently in good legal standing. Klayman, who founded the conservative legal organization Judicial Watch, was suspended last year from practicing law in Washington, D.C., after being found to have committed numerous ethical violations.

Klayman told Sportico that, on Rokit’s behalf, he has also been attempting to interest the FBI and U.S. Attorney in Houston with allegations of Fertitta Entertainment’s “illegal conduct.” Klayman provided a copy of a letter he says he sent to federal law enforcement officials in March, accusing Fertitta of fraudulently inducing Kendrick and Rokit into sponsoring the Rockets under the promise that, under a separate beverage agreement, certain quantities of Rokit-branded liquor would be purchased by Landry’s establishments. Fertitta has argued that this kind of quid-pro-quo arrangement would never have been allowed under the Texas Alcohol and Beverage Code.

In a brief filed earlier this year, plaintiff lawyers for Rokit acknowledged that the beverage agreement “did not require (Landry’s) to purchase any certain quantity of products,” and that the amounts would ultimately be “determined by defendants for each establishment depending on consumer demand for showcased products.”

Fertitta’s attorney declined to comment, as did spokespeople for the Department of Justice and FBI.

Rokit says it has also raised these complaints to Mastan, and expects him to now pursue them in the Able Events bankruptcy.

Able Events originally filed for Chapter 7 in March 2022, with zero assets and over $70 million in liabilities, most of which related to potential claims by Team Williams and the Rockets. During the bankruptcy’s previous creditors’ meetings that took place last summer, Kendrick acknowledged that Able Events had engaged in sponsorship deals with the sports partners to promote the larger Rokit brand. Despite this, the company contends that only Able Events should 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,” said Able Events’ attorney Joseph Rothberg, in an email to Sportico.

In a motion last month, Mastan told the California Central Bankruptcy Court that one of the primary reasons he wanted to retain a general counsel was to advise him on pursuing avoidance or other claims “belonging to the debtor.”

Mastan did not further specify in the filing which entities or individuals he might be targeting, and the trustee did not respond to requests for comment.

Bruce Markell, a professor of bankruptcy law and practice at Northwestern University, said the petition indicates Mastan’s confidence that he will prevail in clawing back funds into Able Events’ estate—which could then be distributed to creditors. According to the federal bankruptcy rules, Chapter 7 trustees and their outside counsel receive a sliding-scale commission from the debtor’s property sales, which means they only stand to get reimbursed for their work if they are successful in finding assets.

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

Critics of Rokit, including former employees and business partners who spoke to Sportico, have expressed a desire for someone with subpoena power to probe the labyrinthine business structure of Kendrick’s and DeJoria’s enterprise. (While DeJoria’s wealth serves as the financial engine of the company, Kendrick is its face; the ROK in Rokit stands for “Return of Kendrick.”) Mastan, who also serves as trustee for the companion bankruptcy case of a different Rokit subsidiary, Combine Enterprises, now represents those critics’ greatest hope—and, to that point, Rokit’s biggest threat.

In January, the bankruptcy court judge overseeing Able Events granted the Houston Rockets’ motion to take a Rule 2004 Examination, which entitles an interested party to compel that the debtor to answer questions and produce documents on a broad range of related financial matters. In a February motion filed with the court, the NBA team accused Rokit—its former jersey-patch sponsor—of playing a game of “whac-a-mole” to avoid having to turn over documents.

Kendrick has acknowledged that petitioning for bankruptcy protection, Able Events had changed its name from Rokit Marketing Inc. to keep it from “reflect(ing) badly on all the other good things that we’re doing in the Rokit Group of Companies.”

When Mastan asked Kendrick last year for a list detailing those other things the group did, David Neale, one of Able Events’ lawyers, suggested that no such document 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 said.

In an email, a Rokit representative told Sportico that Kendrick was eager for the creditor’s meeting to resume and was not responsible for the string of postponements. (An attorney representing the Houston Rockets in the case declined to comment.)

The fitful developments in the Able Events bankruptcy mirror those in the lawsuit filed against Rokit by former employee 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 acquire a majority stake in Moses’ wine business, at a purchase price of $250,000. Kendrick was originally scheduled to sit for a deposition in the case in September of 2021, but his out-of-court testimony was delayed multiple times, before finally taking place in late February of 2022.

In Kendrick’s deposition, a transcript of which was obtained by Sportico, Moses’ lawyer repeatedly pressed the Rokit chairman about the many different subsidiaries within his corporate empire—and Kendrick repeatedly said he didn’t recall the relationship between the companies or who was employed at which ones. For example, Kendrick said he didn’t know if ROK Stars had an ownership stake in ROK Drinks and that he was unsure about the relationships between ROK Drinks LTD and another entity, Rokit Drinks.

Kendrick also cast doubt on the idea that he, as chairman of the overall group, was actually in control of the subsidiaries. That contention was challenged in a separate deposition of former ROK Drinks CEO Alison Kennedy, who said Kendrick was involved in “everything.”

A jury last month awarded Moses over $500,000 in damages against the Rokit affiliates he sued after the judge in the case had previously dismissed Moses’ claims against Kendrick, individually. With interest, the total judgment could be in excess of a million dollars. Moses declined to comment, and the Rokit representative said the company planned to appeal the verdict.

Last October, ROK Stars PLC, Rokit Drinks and another Rokit affiliate, ROK Imports, filed an amended lawsuit against Fertitta Entertainment and Landry’s Inc. Their original suit was previously dismissed by a U.S. District Court judge in Texas, who allowed the plaintiffs to reassert some of their original claims in a new complaint. Fertitta and Landry’s have since filed a motion to dismiss the case for good, which is expected to be ruled on in the coming months.

Meanwhile, two of Rokit’s main holding companies—Rokit World Inc. and Rokit World Limited— are pursuing a $149 million lawsuits against Williams and it principals. That case was originally filed earlier this year in the U.S. District Court for the Southern District of Florida, but was dismissed without prejudice for jurisdictional reasons, as most of the parties are foreign. Klayman subsequently refiled the case in Miami Dade County.

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

Klayman said a separate complaint against Williams is “out for service” in the United Kingdom, which Sportico could not independently confirm.

As part of his email response to questions, the attorney 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 said the F1 constructor was aware of a “second spurious suit” filed against it, which it predicted would be “dismissed in due course.”

While the Rockets and Williams Racing continue their Rokit battles, another erstwhile Rokit partner, the NFL’s Las Vegas Raiders, declined to join the ruckus. The team did not assert a creditor’s claim in the Arkansas bankruptcy case of another Rokit subsidiary, Imply Industry Inc.

Previously known as ROK Brands, Imply Industry, was the party to a 10-year, $60 million sponsorship agreement with the Raiders signed in 2020. But the partnership soon went south after Rokit failed to make an initial $5.9 million payment. Last June, Imply Industry filed for Chapter 7 in Arkansas, claiming $3.8 million in liability, almost $2 million of which it assigned to the Raiders. A spokesperson for the team declined to comment as to why it didn’t file a claim by the bar date this January.

Despite its multijurisdictional legal drama, Rokit has continued to announce new business deals with sports partners and others. In the past six months, the company put out press releases publicizing its sponsorship of an Albanian women’s soccer team, a British motorcycle racing team, and a motorcycle racing series in the U.K. It also extended its ambassador arrangement with Ronnie O’Sullivan, one of snooker’s most accomplished players. (O’Sullivan’s agency did not respond to a request for comment, and neither did representatives for the other new Rokit partners).

In between those sports announcements, Rokit said it had struck an arrangement to pilot out-of-home WiFi networks in cities in Brazil and Albania, with the goal of expanding the services “throughout Albania, Kosovo, Montenegro and North Macedonia.”

In 2018, Rokit held a press conference to announce a $5 billion plan to partner with an Indian state‐owned telecommunications company in creating WiFi hotspots across 27 cities of the Asian subcontinent. That project, however, failed to go forward.

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