Near-Bankrupt Outdoor Voices Sued for $2.5 Million By Jilted Supplier
The details of Outdoor Voices’ purportedly looming bankruptcy are coming into sharper focus as one of its major supply chain partners takes the beleaguered brand to court.
MAS Amity Pte Ltd, the Singapore-based subsidiary of Sri Lanka’s MAS Holdings, is suing the Austin, Tex.-based athletic apparel brand for failing to pay more than $2.5 million for products and services over the past two years.
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The multi-pronged complaint was filed in the Supreme Court of the State of New York last week, with Outdoor Voices’ vendor manual stipulating that the state’s courts have “exclusive jurisdiction over any disputes with respect to its purchases.” The brand was founded in New York City by Parsons graduate Ty Haney in 2014.
The lawsuit states that MAS Amity supplied Outdoor Voices with “substantial quantities of apparel” between February and September of 2023 worth $1.89 million. The numerous orders, which contained products for men and women like leggings, sports bras, dresses, hoodies, jackets, tank tops and T-shirts, were accepted by the brand without any complaint or objection. But the invoices were never paid, attorneys at Sills Cummis & Gross P.C. wrote on behalf of their client.
Over the seven-month period, the supplier sent monthly statements to Outdoor Voices for the amounts due. While the brand never contested the invoices, it never paid them, either.
In addition to running out on its bill, lawyers for MAS Amity allege that Outdoor Voices breached other contracts with the supplier between January and March of last year.
According to the lawsuit, the direct-to-consumer label ordered several shipments of women’s clothing worth a total of $103,849. MAS Amity produced the products to the brand’s specifications, but Outdoor Voices refused to accept the deliveries or pay for them.
The action was a breach of the partners’ Agreement for Finished Goods that caused damages to MAS Amity, which was left with no means of unloading the finished, branded products, the suit said. Further attempts to get Outdoor Voices to accept the goods or pay up were denied.
The sport and performance wear producer also alleged that between March 2022 and July 2023, MAS Amity and Outdoor Voices entered into numerous contracts for the production of women’s clothing under Agreements for Goods to be Manufactured.
In line with those agreements, MAS Amity purchased $515,515 worth of materials to be used in the creation of the clothing. Outdoor Voices reneged on the deal, indicating to the supplier that it planned to refuse delivery and payment for the goods. MAS Amity said the brand “repudiated its obligations,” and the producer was consequently saddled with a large volume of materials that were purchased specifically for its client’s designs.
Now, the global apparel supplier, which has partnered with the likes of Nike, Lululemon and Victoria’s Secret, is demanding that Outdoor Voices pay compensatory damages worth $2.51 million. MAS Amity is also seeking unspecified punitive damages for the interest, counsel fees and other costs it has incurred since the contract breaches began.
But whether it will recoup any damages from the embattled brand is yet to be seen.
Multiple former corporate employees told Sourcing Journal last month that the athleticwear label is on its last legs, and that it is preparing to file for an Assignment for the Benefit of Creditors (ABC)—an out-of-court proceeding for speedy liquidation. Months of missed payments to both offshore and onshore vendors and lapsed store leases were the writing on the wall; all of Outdoor Voices’ nationwide retail locations were shuttered two weeks ago.
While the business has been dogged by unflattering characterizations for years, former employees described an escalation in instability when Lunya founder Ashley Merrill took the reins. Merrill became the brand’s chairwoman in March of 2020, and replaced Gabrielle Conforti as CEO in December of last year.
One Reddit user said the brand entered “a whole new world of chaos” when Merrill began exerting her influence. “She completely lost touch with what OV was about, instead opting to transform us into some sort of Lululemon copy cat,” they wrote. “’Just copy them,’” she’d say, which was not only disheartening but also a complete departure from our original brand ethos.”
A former employee told Sourcing Journal in March that Merrill pushed for an evolution in product strategy that forced the company to scrap approved designs and back out of orders. “Right away, she was like, ‘We’re getting rid of this. We’re bringing this in,’” they said. In speaking with other decision-makers, “She’d be like, ‘How much of this did I buy already? How much of this can I cancel?’”
The insiders’ recollections support MAS Amity’s claims, from the brand’s refusal to accept deliveries of finished goods to its about-face on in-process orders.
But if Outdoor Voices files for an ABC as its former employees allege it plans to do, creditors may find themselves up a creek, according to Amini, LLC associate and bankruptcy expert Jeffrey Chubak.
In a standard bankruptcy case filed under Chapter 11, for example, a creditor like MAS Amity might be entitled to administrative priority, putting its claim among the first in line for repayment under certain circumstances. “But generally speaking there is no such priority in ABCs,” Chubak said.
If Outdoor Voices’ situation is as dire as it looks from the outside, the company would be unable to execute a Chapter 11 bankruptcy, which involves paying back priority claims and investing resources into winding down the business smoothly.
By contrast, under the provisions of an ABC, the brand would be allowed to appoint an assignee of its choice to carry out the liquidation process. MAS Amity “would be treated the same as any other unsecured client, and it would likely recover very little—if anything,” Chubak added.
The supplier could continue the pursuit of damages, “but typically, creditors need to enforce judgments in order to get paid,” he said. “And oftentimes creditors view suing as a fruitless endeavor if a company is circling the drain and headed toward liquidation.”
