FlickrEarlier today, TMZ reported that Power Balance – the manufacturer of rubber hologram custom wristbands – is about lose a $57 million federal lawsuit filed in January by customers alleging the bracelets were bogus.
At the beginning of the year, the company was forced to admit that its product is not scientifically-proven to enhance balance, strength, and flexibility, contrary to the maker’s original claims.
TMZ also said the company will be declaring bankruptcy and shutting down the business for good.
According to sources, rumors of the company closing shop are completely baseless, and while the manufacturer is seeking voluntary protection under Chapter 11-bankruptcy law, it is not going out of business.
A settlement in the amount of $57 million is also apparently way off the mark; there was a preliminary settlement agreement for $1 million back in September.
A full statement from the company is below:
Statement from Power Balance Regarding Corporate Restructuring
Power Balance experienced explosive growth in 2010, with hundreds of professional athletes and millions of people around the world utilizing our performance technologies for no other reason than to improve their lives. The incredibly fast global growth and broad consumer adoption also brought a handful of growing pains.
While we have worked to address and correct the vast majority of those issues, and have put Power Balance in a much better position over the last few months, there remains one major impediment to our growth which we are addressing head on.
Due to the unauthorized marketing tactics of an independent distributor in Australia and the proliferation of counterfeit operations of which we obviously have no control, Power Balance has become the target of number of class action lawsuits. Although we find the lawsuits to be baseless, they have cost the company millions of dollars in legal fees and continue to threaten the core business.
The company has gone through extensive efforts to ensure that its marketing messages are supportable and compliant with local laws. However, lawsuits continue to surface against Power Balance at a tremendous cost to the organization.
Power Balance cannot wait for these issues to resolve themselves or to go away. After many months of extensive legal analysis and exhaustive research, the company has determined that the only viable option at this time is to seek assistance available to us through bankruptcy laws and the protection of the courts.
As such, we voluntarily filed for protection under Chapter 11 of the US Bankruptcy Code on Friday November 18th and are now taking a proactive approach to continuing growth by restructuring parts of the business.
Under the provisions of bankruptcy law, we will continue with business as usual during the process. There will be no interruptions to our ability to deliver performance technologies to the marketplace and we will continue to honor our 100% refund policy and all associated warranties.
Restructuring will allow Power Balance to focus on the design and development of new performance technology products and will put the company on better ground.
We will continue to bring innovative new performance technologies to athletes around the world, and are in the process of introducing Performance Mouth Gear (PMG) to the marketplace through the end of 2011 and into 2012. Created in partnership with a neuromuscular dentist, PMG turns a traditional mouth guard into a device to help relax the muscles in the face and jaw, which allows for proper alignment in the neck and spine and optimal breathing.
Featuring proprietary silicon Bite-Pad and V-Form technologies, we are introducing a $40 product to market that would have cost $2,500 or more just one year ago.
Power Balance wishes to extend its thanks to the millions of people who use its products around the world.