Author Topic: Ultimate Nutrition destroyed millions of dollars of supplement ingredients  (Read 6938 times)


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The top executive at Ultimate Nutrition Inc., which makes protein powder for bodybuilders, says he destroyed millions of dollars of the shake supplement ingredients and other raw materials before putting the company into bankruptcy last year.

Executives at TD Bank N.A., which has been fighting the Connecticut company over a $13 million loan, don’t believe it.

As a battle between the company and the bank escalated last fall, Chief Executive Brian Rubino says he went to Ultimate Nutrition’s warehouse and got rid of roughly 40% of company’s bank-monitored inventory because of its “unsaleability,” according to documents filed in U.S. Bankruptcy Court in Hartford. That move cost the company $3.8 million.

Bank officials are calling for an investigation into what happened to the ingredients, speculating in recent court papers that they might have been “moved off site.” Perhaps the ingredients never existed in the first place but were used to “pump up” the company’s financial statements—a move that would have enabled Ultimate Nutrition to get access to a bigger loan, bank officials said.

As part of the borrowing agreement between Ultimate Nutrition and the bank, Ultimate Nutrition officials were required to report—under oath—the value of its inventory each month. That value helped determine how much borrowed money it could spend.

Bank officials who noticed the rapid drop in inventory levels from October to December told a judge that they haven’t gotten the information they want on the destruction—not even during a June 8 questioning of Mr. Rubino.

Ultimate Nutrition’s bankruptcy lawyer, Irve Goldman, declined to comment on the bank’s suspicion.

Bank officials asked Judge Ann M. Nevins to put a new leader in charge of Ultimate Nutrition’s operations. On top of the alleged inventory destruction, bank officials said that a large portion of Ultimate Nutrition’s raw materials don’t have date stamps to indicate when the ingredient expires.

Judge Nevins set a Sept. 17 hearing to hear arguments on the matter.

The 200-worker company located near Hartford filed for bankruptcy on Dec. 17, blaming regulatory scrutiny. Despite recent profits, it struggled to make up for a $1 million loss in 2012 after having to pay “millions of dollars of one-time temporary labor charges incurred due to labor strife and onerous regulatory requirements,” according to company officials who did not provide more details about the labor charges.

The company was founded in 1979 by Mr. Rubino’s father, Victor, a former bodybuilder who died in 2003. It is projecting to take in more than $35 million in revenue this year, according to court papers.

Ultimate Nutrition introduced amino acid tablets, protein powders and fat burners in the 1980s and bottled whey protein powders in the 1990s, according to its website. The company has sponsored the annual Mr. Olympia bodybuilding contest in Las Vegas, which is the country’s top bodybuilding competition.

Several other bodybuilding supplement companies—facing shaky finances—have filed for bankruptcy in recent years.

Last year, a European company paid $10.1 million for New Jersey-based Gaspari Nutrition Inc., which ex-professional bodybuilder Rich Gaspari put into bankruptcy on Oct. 14 after a slump in demand for its products.

Wisconsin-based Inc., which sells 95% of its nutritional supplements over the Internet, recently revealed a survival plan to repay its debts over time. Founded in 1996, the company filed for bankruptcy on Jan. 24, blaming sales that fell from $35 million in 2012 to $23 million in 2014. On top of that, a burst water pipe that damaged warehouse inventory and caused a large clean-up bill, the company said in court papers.