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Irwin Naturals Inc. (OTC:IWINF), a well-known supplements company, is facing significant financial and legal challenges after being sued by East West Bank (EWB) for failing to make payments on a $40 million loan. As reported by Green Market Report, the lawsuit comes after Irwin Naturals, led by CEO Klee Irwin, allegedly defaulted on the loan and engaged in actions that EWB claims involved self-dealing and the diversion of company funds.
What happened: The situation took a turn earlier this year when Irwin Naturals stopped payments on the loan, prompting EWB to take legal action. The bank’s complaint reveals that the company owes over $18 million, with Irwin personally liable for an additional $7.6 million. In response to the alleged misconduct, EWB sought to exercise its voting rights, which resulted in the removal of Irwin from the company's board and appointment of Michael Tucker as a new board director.
EWB's legal strategy also included a request to the court to appoint a receiver for Irwin Naturals and to remove Irwin from his executive role within the company altogether. The bank's move is aimed at curbing further financial mismanagement and safeguarding its interests.
In May, Irwin indicated his intention to declare bankruptcy, a move that materialized with the recent Chapter 11 filing. This decision, according to Adam Stein-Sapir, a bankruptcy expert with Pioneer Funding Group, signals that Irwin Naturals is looking to reorganize rather than liquidate. "As Irwin's lender, EWB was also able to sweep all cash and generally prevent the business from continuing to operate," Stein-Sapir noted. "The bankruptcy filing can be seen as an action by Irwin to retain control of its operations and put a pause on the California state court proceedings."
Stein-Sapir further explained that the coming weeks and months will be critical for the company, as it explores options to refinance the loan, renegotiate repayment terms, or potentially sell the business. The bankruptcy process could provide Irwin Naturals with the breathing room needed to stabilize its operations, but the road ahead remains uncertain.
The bankruptcy filing includes a list of creditors, such as the legal firm Clark Hill and Canadian accounting firm MNP LLC, among others. The company is expected to update this list within 45 days, potentially revealing additional financial obligations. Irwin Naturals has not published any financial statements in recent months, further complicating the situation for investors and creditors alike.
Meanwhile, Irwin Naturals' presence in the market has diminished. Its investor relations page is no longer accessible, and the company's stock is currently under a Cease Trade Order issued by the British Columbia Securities Commission due to its failure to file financial statements.
As the company navigates through this challenging period, the future of Irwin Naturals remains in flux, with its restructuring efforts under Chapter 11 potentially shaping the next chapter in its corporate saga.
Posted In: IWINF