Rokit Pressed to Settle Claims by Houston Rockets, Williams Racing

A federal bankruptcy court has ordered a settlement conference in the matter of a Rokit subsidiary that backed out of multimillion dollar sponsorship agreements with the NBA’s Houston Rockets and Formula 1’s Williams Racing.

However, it remains an open question as to whether Rokit—the liquor and technology conglomerate owned by billionaire John Paul DeJoria and his British partner, Jonathan Kendrick—is actually in a settling mood. In fact, the company’s recent activities, along with Kendrick’s public statements, suggest it is still planning to pull whatever legal levers it can—in whatever forums it can—to avoid paying the tens of millions of dollars of debts.

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The settlement conference, currently set for Dec. 5, comes after numerous fits and starts in the bankruptcy proceedings of Able Events Inc., a Rokit subsidiary that previously went by the name Rokit Marketing Inc. In March 2022, that entity filed for Chapter 7—becoming one of six Rokit subsidiaries to seek bankruptcy protection over a span of 14 months.

Five years ago, Rokit made a name for itself by entering into a series of high-profile sponsorship deals with professional teams, including the Rockets, Williams, 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, a pattern of delinquency that extended to other of its business dealings as well.

Rokit did not respond to multiple emails seeking comment for this story.

Earlier this year, the Houston Rockets and Williams Racing filed creditor’s claims of $12.7 million and $31.4 million in the Able Events case, amounts that corresponded to court-approved arbitration awards they previously won that Rokit has yet to pay.

In October 2018, the Rockets and Able Events entered a four-year, $40 million agreement for Rokit to become the team’s jersey-patch sponsor. Rokit paid the Rockets an upfront fee of $9.75 million, according to court records, but then ceased making payments thereafter. The Rockets took the matter to arbitration, where the team was ultimately awarded $11.9 million. A Texas state court later tacked on post-judgment interest of 5% per year.

Last May, Rokit sought to upend this judgment by filing a lawsuit in federal court against the Houston Rockets’ parent and sister companies, Fertitta Entertainment and Landry’s Inc., alleging that it had been fraudulently induced into the jersey-patch deal by unmet promise of having Rokit-branded liquor in Landry’s restaurant establishments. However, Rokit was never able to produce a document that memorialized these terms, which, if it existed, likely would have violated Texas liquor law.

On Sep. 26, a federal judge granted the defendants’ motion to dismiss.

“It’s clear from the allegations that Plaintiffs and Defendants never entered into a formal beverage agreement putting the above into practice,” U.S. District Judge Charles Eskridge wrote in his order. “Certainly, no such final writing is alleged. Still, Plaintiffs maintain that such an agreement existed and that it contained express terms.”

Two weeks after its dismissal, on Oct. 12, Rokit filed to have the case appealed. The very next day, Rokit World Inc. and Kendrick sued Bank of America in California Superior Court, accusing the financial institution of unlawfully turning over their “confidential banking information” in response to a subpoena from the court-appointed receiver in the Rockets arbitration matter. Sally Chan, the attorney representing Rokit and Kendrick, declined to comment. A spokesperson for Bank of America did not respond to an email inquiry.

As with the Houston Rockets, Rokit has tried to halt Williams’ ability to collect on its ten-figure arbitral award by suing the British racing constructor for breach of contract. In April, Rokit engaged controversial attorney Larry Klayman to file a $149.5 million case against Williams Racing in Florida. In short order, the case was: dismissed for lack of jurisdiction; refiled in state court; then removed back to federal court, where a judge entered a show cause order after learning Klayman was suspended from practicing law in the Southern District of Florida.

After the Rokit plaintiffs failed to obtain new counsel, the case was once again dismissed. Seemingly undeterred, Kendrick told days later that he was “not letting go” and planned to try his luck refiling the case in California state court. As of this week, public records indicate no such cause of action had yet been pursued. In response to email inquiries, Klayman (who is not licensed to practice in California) declined to provide any specific update other than to say, “stay tuned.”

Apart from the settlement conference, Kendrick has been ordered by the bankruptcy judge to attend via video conference an examination hearing conducted by Chapter 7 bankruptcy trustee Peter Mastan, for which Kendrick is legally compelled to answer questions and produce documents as “person most knowledgeable.” In a creditors’ meeting last year, Kendrick presented a patchy understanding of how the debtor conducted its business.

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