Online sports apparel retailer Fanatics has agreed to settle and drop a lawsuit that it filed against troubled one-click payments provider Bolt in March, according to court documents obtained by TechCrunch.
The settlement occurred as Bolt was in the thick of a new gambit to raise a large round of financing, including a “cramdown” threat for its existing investors, and as founder Ryan Breslow was attempting to reinstate himself as CEO.
Bolt’s partnership with Fanatics was one of the key wins Breslow and Bolt’s then-CEO Maju Kuruvilla lauded back in March 2022.
But by August 2023, the partnership had frayed to the point where Bolt informed Fanatics it was terminating the agreement, the lawsuit states. Fanatics did not agree to the termination on Bolt’s terms and filed the suit seeking to force Bolt to pay up on what it believed were Bolt’s financial contractual obligations.
In an emailed statement attributed to current CEO Justin Grooms, Bolt implied that the settlement involved an ongoing partnership with Fanatics, not the conclusion of it. The statement said: “We value our partnership with Fanatics and remain committed to continue providing them, and all of our customers, with the best-in-class checkout solutions they’ve come to expect from Bolt.” Fanatics declined to comment.
The suit, seen by TechCrunch, was heavily redacted, so the dollar amounts, and the specifics of what Fanatics was alleging Bolt failed to do, are not visible in the filing. It may have revolved around millions of dollars Bolt paid into a fund that was to market Fanatics and Bolt’s partnership, as the Information reported in March. Bolt paid $12 million into the fund and Fanatics was reportedly suing for an additional $50 million, according to that report. In the parts of the lawsuit that were not redacted, Fanatics claims that Bolt used news of the partnership to help it win business from other retailers and convince investors to invest. A few months before Breslow and Kuruvilla went on a media tour touting the Fanatics partnership, they had announced $355 million in Series E financing that gave Bolt an $11 billion valuation in January, 2022.
This isn’t the only big retail partner that sued Bolt. Another marquee customer, Forever 21 owner Authentic Brands Group, sued in April 2022, and the parties later settled the suit with ABG becoming a shareholder of Bolt.
Bolt has also been embroiled in lots of other controversy since landing that $11 billion valuation in 2022. Its outspoken founder, Breslow, stepped down as CEO in early 2022 after allegations that he misled investors and violated security laws by inflating metrics while fundraising the last time he ran the company. Kuruvilla left the company, reportedly voted out by the board in March, around the time Fanatics filed its lawsuit. Breslow was also embroiled in a legal battle with investor Activant Capital over a $30 million loan the company granted to Breslow. It was later settled when Breslow agreed to pay back the money, and the company agreed to implement some better governance guardrails, Forbes reported in May.
Then Bolt shocked the fintech world last month with a leaked term sheet that revealed it is trying to raise $200 million in equity and an unusual, additional $250 million in “marketing credits” at a $14 billion valuation. To achieve that valuation, Bolt is threatening existing investors with an aggressive pay-to-play type cramdown, demanding investors cough up more cash to buy more shares in Bolt at the higher valuation price, or essentially lose their stakes to a 1 cent per share buyout. Part of the news of that new funding round included Breslow attempting to come back as CEO.
However, Bolt investors like BlackRock are not responding well to the threat and have reportedly filed a restraining order to stop it. Meanwhile, Bolt is making threats to sue one of the firms it says agreed to lead the new deal, Silverbear Capital. This after the firm’s partner Brad Pamnani told TechCrunch that Silverbear was never actually involved in the deal but that he’s putting the deal together through a special purpose vehicle managed by a private equity fund based in the United Arab Emirates.
So while threats of lawsuits and drama galore are still flying around Bolt’s boardroom, at least the chapter involving the Fanatics lawsuit appears to be closed.
