IN THE UNITED STATES BANKRUPTCY COURT FOR

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re:
Chapter 11
SCHUTT SPORTS, INC., et al.,1
Case No. 10-12795 (KJC)
Debtors.
(Jointly Administered)
Hearing Date: October 21, 2010 at 3:00 p.m.
Objection Deadline: October 14, 2010 at 4:00 p.m.
DEBTORS’ MOTION TO HOLD RIDDELL, INC.
IN CONTEMPT OF COURT FOR VIOLATION OF THE AUTOMATIC STAY
The above-captioned debtors and debtors-in-possession (collectively, the “Debtors”), by
and through their undersigned counsel, hereby submit this motion (the “Motion”) for entry of an
order (the “Order”), pursuant to sections 105(a), 362(a) and 362(k) of title 11 of the United
States Code, 11 U.S.C. §§ 101, et seq. (the “Bankruptcy Code”), (i) holding Riddell Inc.
(“Riddell”) in contempt of court for willful violation of the automatic stay under section 362(a)
of the Bankruptcy Code; (ii) ordering Riddell and its sales agents to cease immediately
communications to Debtors’ current and prospective customers that are designed to harass
Debtors, disparage Debtors’ products, misinform customers regarding the effect of Debtors’
chapter 11 proceedings, and/or coerce payment to Riddell of the judgment entered against Debtor
Schutt Sports, Inc. (“Schutt”) by the United States District Court for the Western District of
Wisconsin, in a case captioned Riddell, Inc. v. Schutt Sports, Inc., Civil Action Nos. 3:08-cv00711-BBC (the “Wisconsin Litigation”); (iii) ordering Riddell to comply with a subpoena
issued to it for the production of documents and electronic information containing
communications to Schutt’s current and prospective customers that relate to Schutt’s chapter 11
1
The Debtors, along with the last four digits of each Debtor’s tax identification number, are: Mountain View
Investment Company of Illinois (3563), Schutt Sports, Inc. (0521), Schutt Holdings, Inc. (0276), Circle System
Group, Inc. (7711), Melas, Inc. (9761), R.D.H. Enterprises, Inc. (2752), and Triangle Sports, Inc. (6936).
CHI 60,345,424v4 10-6-10
proceedings in this Court; (iv) awarding Debtors their costs, attorneys fees and actual damages
resulting from Riddell’s violations of the automatic stay, in an amount to be proven before this
Court; (v) awarding Debtors punitive damages in an amount appropriate to deter Riddell from
future violations of the automatic stay; and (vi) granting such further and different relief as the
Court deems appropriate.
In support of this Motion, the Debtors respectfully represent as
follows:
Venue and Jurisdiction
1.
The Court has jurisdiction over this Motion pursuant to 28 U.S.C. §§ 157 and
1334. Venue is proper in this district pursuant to 28 U.S.C. § 1408. This matter is core within
the meaning of 28 U.S.C. § 157(b).
2.
The statutory predicates for the relief sought herein are sections 105(a), 362(a),
and 362(k) of the Bankruptcy Code.
Notice
3.
Notice of this Motion has been given to the following parties or, in lieu thereof, to
their counsel, if known: (a) Riddell, Inc.; (b) counsel to the Debtors’ pre- and post-petition
secured lenders; (c) counsel to the Committee; (d) the Office of the United States Attorney
General for the District of Delaware, (e) the Office of the United States Trustee; and (f) all other
parties requesting notice in these cases. In light of the nature of the relief requested herein, the
Debtors submit that no other or further notice is necessary.
Status of the Case and Background
4.
On September 6, 2010 (the “Joint Debtor Petition Date”), each of Mountain
View Investment Company of Illinois, Schutt Sports, Inc., Circle System Group, Inc., Melas,
Inc., R.D.H. Enterprises, Inc., and Triangle Sports, Inc. (collectively, the “Joint Debtors”) filed
a voluntary petition for relief under chapter 11 of the Bankruptcy Code.
2
5.
On September 15, 2010 (together with the Joint Debtor Petition Date, the
“Petition Date”), Schutt Holdings, Inc., a Delaware corporation and the parent company of the
Joint Debtors (the “Additional Debtor” and, together with the Joint Debtors, the “Debtors”),
filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code.
6.
On September 8, 2010, the Court granted joint administration of the Joint
Debtors’ cases and, subsequently on September 22, 2010, joint administration of all of the
Debtors’ cases.
7.
The Debtors are leading designers, manufacturers, distributors and marketers of
team sporting goods equipment, offering an extensive line of football, baseball and softball
protective gear and complementary accessories. The Debtors’ product line is anchored by their
football helmet offering, for which the Debtors have the leading position in the country, both in
terms of technological advancement and market share. The Debtors also have the number-one
market share in football faceguards.
8.
The Debtors are a significant employer in Easton, Pennsylvania and Litchfield
and Salem, Illinois. The Debtors are also a critical provider of football-related products to the
local sporting goods dealers throughout the country and typically represent a significant portion
of their overall business. In addition, the Debtors provide football helmet replacement parts and
reconditioning services for millions of football helmets that are being used by athletes of
colleges, high schools, youth leagues and other institutions across the country.
9.
A detailed factual background of the Debtors’ businesses and operations, as well
as the events precipitating the commencement of these cases, is more fully set forth in the
Declaration of Rollen Jones in Support of the Debtors’ Chapter 11 Petitions and Requests for
First Day Relief, filed on the Petition Date [Docket No. 14].
3
10.
The Debtors have continued in possession of their properties and are operating
and managing their business as debtors-in-possession pursuant to sections 1107(a) and 1108 of
the Bankruptcy Code.
11.
On September 14, 2010, Riddell filed its Motion for Relief From Stay [Docket No.
85] requesting that the Court lift the automatic stay to permit immediate continuation of the
Wisconsin Litigation so that Riddell could seek the imposition of injunctive relief and other
remedies against Schutt.
12.
At a hearing held on September 22, 2010, the Court concluded that the automatic
stay applied to the Wisconsin Litigation. The Court did not grant relief from the automatic stay
to Riddell. On September 28, 2010, Riddell and Schutt submitted to the Court a proposed form
of order to which the parties agreed. Schutt continues to comply with the terms of that agreed
order.
Riddell’s Violation of the Automatic Stay
13.
On September 20, 2010, Schutt filed an objection to Riddell’s motion for relief
from the automatic stay [Docket No. 117]. In that objection, which Schutt brought to the Court’s
attention email correspondence from Joe Wilcox, a sales representative affiliated with Riddell,
containing misrepresentations and insinuations designed to cast doubt on Schutt’s viability as a
going concern (the “Wilcox email”). The Wilcox email is attached hereto as Exhibit 1.
14.
The Wilcox email was not an aberration. Schutt has since come into possession
of additional email communications from sales agents for Riddell sent on email accounts
provided by Riddell to current and prospective customers and/or end users of Schutt products.
The additional Riddell sales emails are attached hereto as Exhibits 2, 3, 4 and 5.
15.
The emails are targeted to a broad audience of current and prospective Schutt
customers and/or end users of Schutt products. For example, Joe Wilcox writes: “It is my duty
4
to make everyone aware of the situation.” Exhibit 1 (emphasis added). Jason Evenhus writes: “I
really think everyone just needs to know what is going on….” Exhibit 3 (emphasis added). And
Doug Carrico’s email contains recipient addresses at schools throughout Ohio. Exhibit 2. The
email from a parent to Robbi Weeks, attached hereto as Exhibit 6, indicates that Riddell sent an
email messages to all the members of his son’s Pop Warner youth league advising that Schutt
“was filing bankruptcy and going out of business.”
16.
The emails prey upon the public’s lack of understanding regarding chapter 11
reorganization to cast doubt on Schutt’s viability as a going concern. Further, Riddell sales
agents are trying to spread fears among current and prospective Schutt customers that Schutt
products lack safety certification and adequate products liability coverage. Riddell sales agents
also raise the specter that an investment in Schutt products would leave a buyer without future
replacement helmets or parts. And Riddell sales agents are attempting to harass and embarrass
Schutt by wielding the $29 million monetary judgment entered pre-petition in the Wisconsin
Litigation as a basis for choosing Riddell products over Schutt’s.
17.
Specific examples from the emails include:
The email of Ryan Wassink is
specifically targeted to a Schutt customer and states:
I'm sure you're already aware of Schutt filing for bankruptcy last week. I would
also like to discuss how this may affect your current equipment and also
equipment for down the road. There is speculation that they will go under. I
think it would be wise to have a Plan B option in place in the event that this
occurs.
Exhibit 5. The email of Jason Evenhus suggests that salespersons selling Schutt products have
not been forthright about the effect of Schutt’s bankruptcy proceedings. Exhibit 3. The email of
Joe Wilcox falsely suggests that because the National Operating Committee on Standards for
Athletic Equipment (“NOCSAE”) is a creditor of the Schutt’s estate, helmets sold by Schutt lose
their NOCSAE safety certification. Wilcox’s email also states that Schutt may no longer sell
5
DNA or ION helmets. Exhibit 1. The emails of Joe Wilcox and Doug Carrico suggest that
Schutt’s insurance may not cover product liability claims that may be brought against Schutt.
Exhibits 1 and 2. The email of Abe Shoubash seeks to speak with a customer about the
uncertainty of local dealers’ ability to recondition Schutt products and forebodes of “a lot of
changes in the coming months” following Schutt’s chapter 11 petition. Exhibit 4. The emails
also specifically cite the $29 million monetary judgment entered against Schutt in favor of
Riddell in the Wisconsin Litigation. Exhibits 1 and 2.
18.
“The automatic stay is one of the fundamental debtor protections provided by the
bankruptcy laws. It gives the debtor a breathing spell from his creditors. It stops all collection
efforts, all harassment, and all foreclosure actions. It permits the debtor to attempt a repayment
or reorganization plan or simply to be relieved of the financial pressures that drove him into
bankruptcy. … The automatic stay also provides creditor protection. Without it, certain creditors
would be able to pursue their own remedies against the debtor's property.” H.R. Rep. No. 95595, 95th Cong. 1st Sess. 340 (1977), U.S. Code Cong. & Admin. News 1978, p. 5787 (emphasis
added). The automatic stay also is designed “to avoid interference with the orderly liquidation or
rehabilitation of the debtor.” St. Croix Condominium Owners v. St. Croix Hotel, 682 F.2d 446,
448 (3d Cir. 1982). Promoting a successful reorganization and rehabilitation of troubled
companies is “one of the most important public interests” in the context of a bankruptcy case. In
re Integrated Health Servs., Inc., 281 B.R. 231, 239 (Bankr. D. Del. 2002).
19.
Section 362(a)(6) of the Bankruptcy Code specifically enjoins any act to collect,
assess, or recover a claim against the debtor that arose before the commencement of a
bankruptcy case. The language of this subsection is “very broad,” Morgan Guaranty Trust Co. v.
American Sav. & Loan Assoc., 804 F.2d 1487, 1491 (9th Cir. 1986), cert. denied, 482 U.S. 929
6
(1987), and is designed to prevent creditor coercion and harassment of the debtor. Id.
“Paragraph 6 is intended to prevent creditor harassment of the debtor in attempting to collect prepetition debts. The conduct prohibited ranges from that of an informal nature, such as by
telephone contact or by dunning letters to more formal judicial and administrative proceedings
that are also stayed under paragraph (1).” 2 Collier on Bankruptcy, ¶ 362.05[6] at 362-41 (15th
ed. 1988) (footnote omitted).
20.
Harassment by a creditor designed to drive away a debtor’s customers is a
violation of the automatic stay. See, e.g., In re Sechuan City, Inc., 96 B.R. 37 (Bankr. E.D. Pa.
1989).
There, the creditor “undertook a studied effort to coerce payment of the lessor's
prepetition claim” by posting signs asserting that debtor did not pay its bills, which were
designed to dissuade potential customers from patronizing the debtor’s business. Id. at 41. The
bankruptcy court rejected the notion that the creditor was simply reporting facts:
Defendants' contention that they simply sought to inform the public of the debtor's
bankruptcy filing and not to harm the debtor is belied by the striking appearance
of the signs, the signs' content (requesting the debtor's restaurant not be
patronized), by the testimony which conceded that the defendants' conduct was
intended to shame and embarrass, and by the defendants' attempt to discourage
customers … While the lessor did not bring suit against the debtor, its actions
were designed to place the debtor in a position of either paying the lessor's
prepetition claim or losing business due to defendants' actions. Such a choice runs
counter to the purpose of § 362(a).
Id. at 41-42.
21.
A bankruptcy court is empowered to restrict a pre-petition creditor’s
communications where those communications were designed to erode the value of the debtor’s
assets and interfere with the debtor’s ability to sell property of the estate. See generally In re
Matheson Industries, Inc., 423 B.R. 643646 (E.D. Mich. 2010) (affirming bankruptcy court
injunction prohibiting creditor from making certain communications to potential buyers of
debtors’ property). In Matheson, the court upheld an injunction because the offending creditor’s
7
communications threatened to depress value of the debtor’s estate, which inured to the detriment
of other creditors. See id. at 652.
22.
Riddell’s sales force appears to be engaged in a coordinated campaign to spread
misinformation regarding the effect of Schutt’s chapter 11 case and to embarrass Schutt for not
paying the Wisconsin Litigation $29 million judgment (which is still subject to post-trial motions
and an appeal). Given the size of the Wisconsin Litigation judgment, presumably it would be in
Riddell’s best interest to maximize the value of Schutt’s estate. However, Riddell and Schutt are
the two largest competitors in a $90 million annual market for football helmet sales. Riddell
may be willing to risk depressing the value of Schutt’s estate – even though that reduces the
value to pay pre-petition claims such as Riddell’s – because Riddell could recoup more value
from driving Schutt out of business and assuming near monopoly status over the football helmet
market.
23.
Thus, when Riddell interferes with Schutt’s customer relationships by spreading
misinformation regarding Schutt’s chapter 11 case, it does so to gain value for itself at the
expense of other creditors. That is a classic problem the automatic stay was designed to avoid.
See In re Kelton Motors, Inc., 121 B.R. 166, 194 (Bankr. D. Vt. 1990) (holding that trustee stated
a viable cause of action for violation of the automatic stay where a creditor’s actions were
“calculated to and did interfere with [debtor’s] ability to reorganize as part of its alleged bad faith
scheme to put [debtor] out of business so, inter alia, one of the Defendants, a competitor of
[debtor’s] would gain [debtor’s] market share”). This Court should intervene to stop Riddell
from violating the automatic stay in an attempt to capture Schutt’s customers for itself.
24.
The harm to Schutt from Riddell’s conduct is irreparable.
Riddell is using
Schutt’s chapter 11 proceeding, which is designed to provide Schutt with a “breathing spell,” to
8
impose on Schutt the burden and distraction of dispelling rumors and misinformation spread by
Riddell’s sales force. Riddell is using misinformation to try to poison Schutt’s goodwill and
disparage its products – all in the effort to reduce sales of Schutt helmets. Thus, Riddell is trying
to do indirectly what it was not given leave to accomplish directly when it sought relief from the
automatic stay to pursue a pre-petition claim for an injunction barring the sale of Schutt’s DNA
and ION helmets. It is difficult to measure this harm with precision – particularly because the
content and extent of communications from Riddell’s sales force regarding Schutt’s bankruptcy
proceedings remains unknown. Already, Schutt has been approached by customers concerned by
what they have been advised by Riddell’s sales force. As such, Schutt is prejudiced by having to
fend off one creditor-competitor’s harassment at the same time Schutt’s personnel must focus on
the challenges of reorganization – including the redesign of its DNA and ION football helmets –
and overcoming any stigma that may result from a bankruptcy filing.
Riddell’s use of
misinformation about these chapter 11 proceedings should not be permitted at the time when
creditors such as Riddell are required by the automatic stay to stand down temporarily and afford
the Debtors their breathing spell.
25.
The emails attached to this Motion are those Schutt has uncovered on its own.
Undoubtedly these emails represent a small sampling of the communications from Riddell’s
sales force to current and prospective Schutt customers. As explained below, Riddell has failed
to disclose communications made using Riddell’s email system to current or prospective Schutt
customers relating to Schutt’s chapter 11 case.
Riddell’s Failure to Produce Communications
26.
In response to the discovery of the Wilcox email, on September 20, 2010, Schutt
served on counsel for Riddell a subpoena duces tecum (“Subpoena”) issued to Riddell requiring
the production at the Court’s September 22, 2010 hearing of:
9
ALL DOCUMENTS, CORRESPONDENCE, ELECTRONIC COMMUNICATIONS,
OR ANY OTHER COMMUNICATIONS IN YOUR POSSESSION OR CONTROL
CONTAINING ANY OF THE FOLLOWING:
Communications from Joe Wilcox, from Riddell, Inc. (“Riddell”), and/or from any other
employee or agent of Riddell that were made to any current or prospective customer of
Schutt Sports, Inc. (“Schutt”) that refer in any way to Schutt’s pending bankruptcy case
or the effects of Schutt’s pending bankruptcy case.
The Subpoena is attached hereto as Exhibit 7.
27.
Riddell did not produce any responsive documents on September 22, 2010.
However, Riddell’s counsel indicated to Schutt’s counsel that Riddell had begun to search for
responsive documents.
28.
On September 23, 2010, counsel for Schutt wrote to Riddell’s counsel requesting
compliance with the Subpoena and inquiring what steps Riddell was taking to stop the spread of
misinformation by its sales force. The September 23rd correspondence is attached hereto as
Exhibit 8. Riddell did not produce documents or write in response to the September 23rd
correspondence, and so counsel for Schutt wrote to Riddell’s counsel again on October 5, 2010.
The October 5th correspondence is attached hereto as Exhibit 9.
29.
To date, Riddell has not produced any documents in response to the Subpoena.
On October 6, 2010, counsel for Riddell wrote that Riddell has not completed its search for
responsive documents.2 The letter from Riddell’s counsel is attached hereto as Exhibit 10.
Despite asserting that Riddell’s search for documents was not complete, Riddell’s counsel asserts
that it is Riddell’s position that there have been no efforts to interfere with Schutt’s efforts to
reorganize. Moreover, Riddell’s counsel advised that the Wilcox email was written by an
independent contractor, not a Riddell employee – suggesting that Riddell does not intend to
produce similar communications.
2
In the sixteen days that have elapsed since Schutt served a subpoena on Riddell, it is unclear what steps, if any,
Riddell has taken to preserve and locate responsive documents. That Schutt has uncovered at least six such e-mails,
while Riddell has failed to produce a single responsive document suggests a lack of diligence on the part of Riddell.
10
30.
The Subpoena includes within its scope all electronic communications within
Riddell’s possession or control. The email communications contained in Exhibits 1 through 5
were sent using an official “riddellsales.com” email account. A search of public domain names
confirms that the domain “riddellsales.com” is owned by Riddell’s parent Easton-Bell Sports,
Inc. and is operated by Riddell to market and sell its products. The search results are attached
hereto as Exhibit 11. Even assuming Riddell salespersons such as the authors of the emails
contained in Exhibits 1 through 5 are considered independent contractors, they are acting as
agents of Riddell in their communications selling Riddell products. And, more importantly,
Riddell has access to the emails sent using the “riddellsales.com” email accounts it owns and
operates. As such, all electronic communications using “riddellsales.com” email accounts are
within Riddell’s possession or control and are, therefore, within the scope of the Subpoena.
31.
Riddell’s compliance with the Subpoena is necessary in order for Schutt to learn
more fully the scope of Riddell’s communications related to Schutt’s chapter 11 case that were
directed to current and prospective Schutt customers.
11
Conclusion
WHEREFORE, the Debtors respectfully request that this Court enter an order, pursuant
to sections 105(a), 362(a) and 362(k) of the Bankruptcy Code, granting this Motion and:
(i) holding Riddell in contempt of court for willful violation of the automatic stay under
section 362(a) of the Bankruptcy Code;
(ii) ordering Riddell and its sales agents to cease immediately communications to
Debtors’ current and prospective customers that are designed to harass Debtors, disparage
Debtors’ products, misinform customers regarding the effect of Debtors’ chapter 11 proceedings,
and/or coerce payment to Riddell of the judgment entered against Schutt in the Wisconsin
Litigation;
(iii) ordering Riddell to comply with a subpoena issued to it for the production of
documents and electronic information containing such communications;
(iv) awarding Debtors their costs, attorneys fees and actual damages resulting from
Riddell’s violations of the automatic stay, in an amount to be proven before this Court;
(v) awarding Debtors punitive damages in an amount appropriate to deter Riddell from
future violations of the automatic stay; and
(vi) granting such further and different relief as the Court deems just and proper.
Dated: Wilmington, Delaware
October 6, 2010
GREENBERG TRAURIG, LLP
/s/ Sandra G. M. Selzer
Victoria W. Counihan (DE Bar No. 3488)
Sandra G. M. Selzer (DE Bar No. 4283)
The Nemours Building
1007 North Orange Street, Suite 1200
Wilmington, Delaware 19801
Telephone: (302) 661-7000
Facsimile: (302) 661-7360
Email: counihanv@gtlaw.com
selzers@gtlaw.com
12
-andKeith Shapiro
Nancy A. Peterman
77 West Wacker Drive, Suite 3100
Chicago, Illinois 60601
Telephone: (312) 456-8400
Facsimile: (312) 456-8435
Email: shapirok@gtlaw.com
petermann@gtlaw.com
Counsel for the Debtors
and Debtors-in-Possession
13
EXHIBIT 1
EXHIBIT 2
Subject: FW:
From: "Doug Carrico" <dcarrico@riddellsales.com>
Date: Wed, September 15, 2010 9:29 pm
To:
"ADAM ROSE" <adrose@tvschools.org>
"ALYSSIA DOWNEY" <adowney4129@columbus.k12.oh.us>
"ANDY EY" <eya@wcsoh.org>
"ANTHONY BROWN" <abrown@columbus.k12.oh.us>
"BECKY GRIMES" <becky_grimes@hboe.org>
"BILL BEAN" <ec_bbean_1@k12server.mveca.org>
"BILL CONLEY" <conleyb@ohiodominican.edu>
"BILL MOSCA" <wmosca@worthington.k12.oh.us>
"BILLY MARTIN" <billy_martin@hboe.org>
"BOB TRIANO" <rtriano@columbus.k12.oh.us>
"BRAD WHITLATCH" <mcctad@worthington.k12.oh.us>
"BRIAN SHIPLEY" <bshipley@uaschools.org>
"BROOK CUPPS" <cuppsb@graham.k12.oh.us>
"CAL ADAMS" <cadams@marysville.k12.oh.us>
"Carol Evans" <cevans@buckeyevalley.k12.oh.us>
"CATHY HENRY" <chenry@cdeducation.org>
"CHAD COFFMAN" <ccoffman@caldwell.k12.oh.us>
"CHAD LITTLE" <clittle@bloom-carroll.k12.oh.us>
chad_schulte@hboe.org
"CHARLIE LASWELL" <claswell@bloom-carroll.k12.oh.us>
"CHIP EBERT" <chip_ebert@hboe.org>
"CHUCK YATOR" <rtyator@whitehall.k12.oh.us>
"CLINT FETTY" <cfetty@reyn.org>
"CORINNE MOORE" <CMoore9351@columbus.k12.oh.us>
"CRAIG EIER" <tl_ceier@mveca.org>
"DAN ADAMS" <danadams@east-muskingum.k12.oh.us>
"DARYL SATTERFIELD" <dsatterfield@laca.org>
dave.gray@omeresa.net
"DAVE LAWLER" <dlawler@cdeducation.org>
"DAVE LEWIS" <dlewis@reyn.org>
"DAVE MORLAND" <dmorland@laca.org>
dthompso@cdeducation.org
"DENNIS DEW" <dennis.dew@swcs.us>
"DENNIS MURPHY" <dennis.murphy2@va.gov>
"DERICK BUSENBURG" <dbusenburg@ekschools.com>
"DOMINIC FACCIOLLA" <dominic_facciolla@columbusacademy.org>
"DON BUSH" <dbush@cdeducation.org>
"DOUG JONES" <djones9508@columbus.k12.oh.us>
"DUGAN HILL" <dhill@caldwell.k12.oh.us>
"ERIC MUSIC" <emusic3819@columbus.k12.oh.us>
"GREG BURKE" <greg_burke@swcs.k12.oh.us>
"GREG HOWELL" <howellg@triad.k12.oh.us>
"GREG REAMSNIDER" <greamsnider8500@columbus.k12.oh.us>
hstanfor@capital.edu
"JACK POPPE" <PJPOPPE@AOL.COM>
"JACOB VITT" <jvitt@wls.k12.oh.us>
jsutton716@columbus.k12.oh.us
"JAMES WASHINGTON" <jwashington4273@columbus.k12.oh.us>
"JASON SCHNEIDER" <jschneider@gccsk.k12.org>
"JAY SCHWANKE" <schwanke_jay@mail.dublin.k12.oh.us>
"JAY WOLFE" <jay_wolfe@olentangy.k12.oh.us>
"JEFF GOOD" <agood2542@columbus.k12.oh.us>
"JEFF QUACKENBUSH" <jquackenbush@laca.org>
"JEFF SAKAL" <sakal-j@troy.k12.oh.us>
"JEFF SHEPPARD" <jsheppard3911@columbus.k12.oh.us>
"JEFF TODD" <jtodd@worthington.k12.oh.us>
"JEFF WILL" <willj@wcsoh.org>
"JEREMY FROEHLICH" <jfroehlich6776@columbus.k12.oh.us>
"JIM DOUGHERTY" <jim_dougherty@hboe.org>
"JIM KASER" <jkaser@muskingum.edu>
"JIM STOYLE" <stoyle_j@treca.org>
"JIM WOODRUM" <jim.woodrum@omeresa.net>
"JOHN BERNANS" <davis_ad@mail.dublin.k12.oh.us>
"JOHN McGIFFIN" <jmcgiffin@laca.org>
"JOSH HAYES" <JHAYES@WORTHINGTON.K12.OH.US>
"JUSTIN SANFORD" <sanfordj@gjps.org>
"KATHY KINNARD" <kkinnard@grandviewschools.org>
"KELLY WOLFE- LHSD" <kwolfe@loganhocking.k12.oh.us>
"KENT RIGGS" <kriggs@canalwin.k12.oh.us>
"KEVIN JARRETT" <kjarrett@laca.org>
"Kevin Smith" <kevin.smith.bxyw@statefarm.com>
"KEVIN REED" <reedke@dcs.k12.oh.us>
"KEVIN VARNISH" <VARNISH@DENISON.EDU>
"KIM SUTTON" <sutton@osd.oh.gov>
"KIP WITCHEY" <witchey_kip@mail.dublin.k12.oh.us>
"KIRK MANNS" <kirk_manns@knoxnet.k12.oh.us>
"MARIO BOWLES" <mbowles6241@columbus.k12.oh.us>
"MARK APRILE" <mark_aprile@fc.pickerington.k12.oh.us>
"MARK BOWMAN" <mdbowman@uhs.laca.org>
"MARK PRINCEHORN" <mark_princehorn@hboe.org>
mrider@laca.org
"MARK SHIVELY" <nl_mshively@seovec.org>
"MATT MCPHAIL" <mattmcphail@fairfield-union.k12.oh.us>
"MATT MORTON" <cm242305@ohio.edu>
"MICHAEL SCHAEFER" <mschaefer@uaschools.org>
"MIKE ASBECK" <masbeck@cdeducation.org>
"MIKE DEVOL" <mike.devol@caldwell.k12.oh.us>
"MIKE FERGUSON" <fergusonm@whitehall.k12.oh.us>
"MIKE GEORGE" <michael.george@gocruisers.org>
"MIKE MEDICH" <medichm@oata.org>
"MIKE ROTONDA" <mrotonda@columbus.k12.oh.us>
"MIKE WHITE" <mikewhite@kitcol.com>
"MIKE WILLETS" <wrac@woh.rr.com>
"MOLLY FEESLER" <molly.feesler@bexleyschools.org>
"NATHAN SMITH" <mc-smithn@seovec.org>
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rsponhaltz@laca.org
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"SCOTT GORDON" <coachgordon@worthingtonfootball.com>
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"STEVE COATE" <swcoate@earthlink.net>
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"TOM SAPPINGTON" <tsapping@yahoo.com>
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"WHIT PARKS" <pparks@laca.org>
-------------------------------------------------------------------------
From: Doug Carrico
Sent: Wednesday, September 15, 2010 3:44 PM
To: Doug Carrico
Subject:
Hello everyone this is Doug Carrico with Riddell. I wanted to share some
information with you that has made a large impact in the athletic
industry. As many of you may know Schutt Sports filed for bankruptcy on
Labor Day after losing over a $29 million dollar lawsuit for violating
helmet patients (see attachment). I know there are a lot of questions
from those of you that use Schutt product. Questions like, can I still
buy Schutt? Do they have liability insurance? Is the equipment I
currently have still under warranty or covered in case of liability?,
etc. I can't answer a lot of those questions but I can tell you that
Riddell is the largest reconditioner and helmet manufacturer in the
World and we are poised and ready to help any of you that may be looking
for another alternative. We are a company that is continuing to grow and
is continuing to research our product to put the most protective
equipment on the market. We have over 20 million dollars in product
liability insurance. This is a great time to look at Riddell. If you are
interested I would appreciate the opportunity to speak to you about
reconditioning and new equipment. Now is the time of the year that most
of you are thinking about reconditioning and we have many great specials
this time of the year on our new equipment. You can reach me anytime at
614-747-0125 or at dcarrico@riddellsales.com. Thank you all and I look
forward to the opportunity.
Sincerely,
Doug Carrico
Riddell
EXHIBIT 3
From: Jason Evenhus [mailto:jevenhus@riddellsales.com]
Sent: Thursday, September 23, 2010 9:02 AM
To: undisclosed-recipients:
Subject: Schutt Sports files for Chapter 11 bankruptcy
I really think everyone just needs to know what is going on and I want to make sure I do my job
in giving the facts, which have been reported and filed in the info below.
I am sure the people who are selling Schutt products have probably not brought this to anyone’s
attention.
I have included an article (scroll down below my helmet) that gives a summary of what is going
on and the below link gives you the official document of their filing in court:
http://assets.bizjournals.com/cms_media/stlouis/schuttbankruptcy.pdf
You can also “google” it using “Schutt Sports + Chapter 11”.
Hope your season is going great and please feel free to call my cell below if anything is needed.
Sincerely,
Jason Evenhus
503-804-6626 cell
Riddell Athletic Products
Riddell Reconditioning
To get free access to this article and other sporting goods business news and information or to
subscribe to the SportsOneSource UPDATE newsletters, go to:
http://www.SportsOneSource.com/
Regards,
dj
Schutt Sports Seeks Protection Under Chapter 11
Schutt Sports, Inc. announced that Schutt and certain of its affiliates filed petitions under Chapter
11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District
of Delaware. The company said it is exploring selling some or all of the businesses or raising
additional equity.
The company said it intends to operate its business without interruption during the Chapter 11
cases as it explores certain strategic options to maximize value and recoveries for all
stakeholders.
"Schutt's management and board of directors determined that a Chapter 11 process would
provide the best long-term solution for our customers, suppliers, and employees," said Robert
Erb, president and chief executive officer of Schutt. "This process will allow us to continue
operating our business as usual and to continue servicing our customers without disruption. We
have the support of our bank, a great brand and look forward to strengthening our balance sheet
and serving our customers for many years to come."
The company has obtained a Debtor-in-Possession financing facility of $34 million, which will
provide sufficient funds to continue normal business operations.
The company is exploring strategic options to maintain long-term health, including selling some
or all of the businesses or raising additional equity. The Company has received a proposal for a
plan of reorganization funded by a rights offering, backstopped by a group of investors. Riddell,
Inc., whose lawsuit was a proximate cause of the need to file chapter 11 would not be given the
opportunity to invest in the proposed rights offering.
The proposed plan of reorganization would also provide for a significant deleveraging of the
company's balance sheet. The company is considering this proposal, while it also seeks other
equity sponsors and acquirers for Schutt. If one of these transactions were to materialize, it
would be implemented via a plan or Section 363 auction transaction. The Company has engaged
Oppenheimer & Co., Inc., as its investment banker, to explore these options.
The company will continue to pursue vigorously its appeal of the judgment entered against it in
favor of Riddell, Inc. during this process.
Schutt Sports is a domestic manufacturer and one of the primary makers of football helmets and
faceguards. Three out of four professional football players wear either Schutt gear. Its line
include the ION 4D, AiR XP, and DNA line featuring TPU Cushioning. Schutt is also the
manufacturer and supplier of bases to Major League Baseball and helmets and protective
equipment for the US Olympic Softball Team.
Riddell Seeks Second Patent Infringement in Most Recent Lawsuit
In related news, following a decision in a Wisconsin court in favor of Riddell, the football
equipment giant is again going after Schutt regarding another claim of patent infringement. In
this most recent lawsuit, Riddell claims that Schutt has violated U.S. patent number 7,506,384,
awarded to Riddell on March 24, 2009, entitled “Shoulder Pad for Contact Sports, or (“the ‘384
patent”). Schutt was never licensed under said patent, so use of that particular technology is
strictly prohibited under federal law. What the court refers to as “the accused should pads” are
none other than the Schutt AiR Flex QB-WR -9405 model. Riddell, the plaintiff, is claiming that
the infringement has caused “irreparable harm” to the company, for which there is no solution
unless the court rules in Riddell’s favor.
EXHIBIT 4
From: Abe Shoubash [mailto:ashoubash@riddellsales.com]
Sent: Monday, September 20, 2010 10:36 AM
To:
Subject: From Abe at Riddell
I hope you are doing well my friend. I just wanted to check with you to see if we could get
together and chat about reconditioning with Riddell. The reason I am asking you this is that in light of Schutt filing
for Chapter 11 a week or so ago I am not sure what effects or uncertainly this will have on the local dealer or
Stadium system to effetely reconditioning your equipment. I know that there will be a lot of changes in the coming
months and I just wanted to ask for your business to allow Riddell to be your go to company. Give me a buzz and I
can chat with you in detail. Thanx again
Abe Sho <<image004.jpg>> ubash
H 603-513-1232
C 603-892-0910
EXHIBIT 5
From: Ryan Wassink [mailto:rwassink@riddellsales.com]
Sent: Monday, September 20, 2010 9:39 AM
To:
Subject: football equip.
Hi
What is your prep/open time during the day or before school? We have a
nice reconditioning special that I think you'll be interested in.
I'm sure you're already aware of Schutt filing for bankruptcy last week.
I would also like to discuss how this may affect your current equipment
and also equipment for down the road. There is speculation that they
will go under. I think it would be wise to have a Plan B option in place
in the event that this occurs.
Thanks,
Ryan Wassink
Riddell Team Sports
651-470-6134
rwassink@riddellsales.com <mailto:rwassink@riddellsales.com>
CHI 60,348,486v1 10-6-10
EXHIBIT 6
On Sep 24, 2010, at 8:31 AM, "Robbi Weeks" <Rweeks@SCHUTT-SPORTS.com> wrote:
This is just an fyi….I’ve already talked to the customer and explained the situation but thought you might want to
see this
Robbi L Weeks/CSR
Schutt Sports Customer Service
Western-Midwest Region
800-426-9784 ex 2118
From:
Sent: Friday, September 24, 2010 7:41 AM
To: Robbi Weeks
Subject: Question
Robbi,
An email was received by many members of the Pop Warner league my son plays in saying that Schutt
Sports was filing bankruptcy and going out of business. It was sent by a Rep. from Ridell so I wanted to
check and see if there was any truth to it and if so what does that mean for the future?
Hoping its just a rumor
EXHIBIT 7
EXHIBIT 8
EXHIBIT 9
EXHIBIT 10
EXHIBIT 11
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