StemTech files for Chapter 11 bankruptcy
Stemtech International was founded in 2005 by Christian Drapeau and Ray Carter. The company is currently based out of Florida and operates in the nutrition MLM niche.
BehindMLM reviewed StemTech in 2012 and found the company had a strong focus on autoship affiliate recruitment.
Over the last eight months Alexa traffic estimates for the StemTech website indicate a consistent month to month decline in business.
In 2016 StemTech’s gross revenue was $43.5 million, down from $52.5 million in 2015.
On February 2nd, 2017, StemTech filed for Chapter 11 bankruptcy.
In their Chapter 11 filing, StemTech cite 1 to 49 creditors and assets of between one and ten million.
The amount StemTech currently owes its creditors is in the vicinity of $5 million dollars.
The twenty largest unsecured amounts owed to creditors are as follows:
- Andrew Paul Leonard (amount disputed) – $1.6 million
- Wilhelm Keller (loan) – $772,000
- Cerule LLC (raw materials supplier, amount disputed) – $685,838
- Marinova PTY LTD (raw materials supplier, amount disputed) – $554,000
- Nixon Peabody (legal services) – $163,183
- Chelsea Investments (rent) – $151,450
- Hollins & Schechter (legal services) – $150,605
- Federal Express (shipping) – $148,537
- American Express (credit card fees) – $135,348
- Andrew Goodwin (loan) – $100,000
- Hutcheson Bowers (legal services) – $84,851
- Berkowitz Pollack (accounting services) – $94,407
- Energy Tools International (inventory) – $90,173
- United Data Technologies (IT consulting) – $58,690
- Lozeau Drury (legal services) – $58,000
- Fusion Packaging (raw material supplier) – $38,208
- Environmental Research Center (settlement) – $36,792
- AIDP Inc. (raw materials supplier) – $32,440
- Broad and Cassel (legal services) – $29,973
- California EPA (settlement) – $21,000
Reasons cited for StemTech’s bankruptcy are:
- a 2008 lawsuit filed by Andrew Leonard for $1.6 million (StemTech lost their appeal last year)
(Andrew Leonard) has vigorously pursued collection efforts.
These efforts have included an attempted levy against treasury stock and, more recently, the Judgment Creditor sought the appointment of a receiver for purposes of liquidating the patents and for an assignment of the equity interests in certain subsidiaries.
- Cerule’s 2016 lawsuit for alleged non-payment of products supplied
The (Cerule) litigation has been costly and depleted cash which would otherwise be used for day-to-day business operations.
These costs, coupled with losses stemming primarily from foreign currency adjustments, have resulted in Debtor defaulting on the Converted Line and Term Loan, both of which are scheduled to mature on December 1, 2016.
- failure to make lease payments
On January 30, 2017, the Debtor’s landlord served a three (3) notice of default and opportunity to cure relating to the Debtor’s corporate headquarters lease.
As I write this there’s no mention of StemTech’s bankruptcy on their website or social media profiles.
“Company News” on the StemTech website returned a message stating the headline feed was unavailable.
The last post on the StemTech Facebook page promotes their DermaStem Lift product and was made on February 2nd.