Tough Mudder Sold in Bankruptcy to Rival, Spartan

(Bloomberg) -- Tough Mudder Inc., the organizer of extreme obstacle races that was forced into bankruptcy by creditors, will be taken over by its main competitor, Spartan Race.

Under a deal approved Tuesday in federal court in Wilmington, Spartan will pay $700,000 and assume as much as $10 million in liabilities, including the requirement to honor pre-paid tickets to Tough Mudder events. Spartan hosts 250 events a year in about 40 countries in which participants run, crawl through mud and climb over obstacles.

Spartan has already hired many of Tough Mudder’s employees, including its former chief executive officer, Kyle McLaughlin, Spartan attorneys said in court.

“This is a particularly cool business, I have to say,” U.S. Bankruptcy Judge Christopher Sontchi said in approving the sale. The sale “preserves jobs and an interesting product that provides a lot of satisfaction to its participants.”

In November, Spartan signed a letter of intent to buy Tough Mudder, but a dispute among Tough Mudder’s founders and its main lender killed the deal, according to court documents. In January, about a month after an attempt to mediate the dispute failed, Tough Mudder was forced into bankruptcy by some of its creditors.

Within weeks, Sontchi appointed a trustee to take over the company. The trustee, Derek Abbott, with the law firm Morris Nichols Arsht & Tunnell, negotiated the Spartan deal.

The case is Alleged Debtor Tough Mudder Inc. 20-10036, U.S. Bankruptcy Court, District of Delaware (Wilmington)

To contact the reporter on this story: Steven Church in Wilmington, Delaware at schurch3@bloomberg.net

To contact the editors responsible for this story: Rick Green at rgreen18@bloomberg.net, Dawn McCarty, Christopher DeReza

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