Online sports apparel retailer Fanatics has agreed to settle and dismiss a lawsuit it filed in March against troubled one-click payment provider Bolt, according to court documents obtained by TechCrunch.
The settlement comes as Bolt is in the midst of a new maneuver to raise a big fund, including threats of a “clampdown” against existing investors, and as founder Ryan Breslow seeks to return as CEO. Bolt had no immediate comment on the lawsuit settlement. Fanatics declined to comment.
Bolt's partnership with Fanatics was one of the key achievements that Breslow and Bolt's then-CEO Maju Kuruvilla praised in March 2022.
But by August 2023, the partnership had soured, and Bolt notified Fanatics he was terminating the agreement, the lawsuit states. Fanatics did not agree to Bolt's termination on his terms and filed suit seeking to compel Bolt to pay financial contractual obligations that Bolt allegedly owed.
The lawsuit, reviewed by TechCrunch, is heavily redacted, and amounts and specifics that Fanatics alleges Bolt neglected to disclose are not visible in the complaint. As The Information reported in March, the suit may have been over millions of dollars Bolt paid into a fund to promote the Fanatics-Bolt partnership. The report said Bolt paid $12 million to the fund, and Fanatics sued for another $50 million. In unredacted portions of the lawsuit, Fanatics claims Bolt used news of the partnership to gain business from other retailers and convince investors to invest in it. Months before Breslow and Kuruvilla went on a media tour to promote their partnership with Fanatics, they announced $355 million in Series E funding, giving Bolt a valuation of $11 billion in January 2022.
This isn't the only major retail partner to sue Bolt: Another major client, Forever 21 owner Authentic Brands Group, also filed suit in April 2022, after which the two sides settled and ABG became a shareholder in Bolt.
Bolt has also been embroiled in a number of other controversies since it was valued at $11 billion in 2022. Breslow, the company's known for being outspoken, stepped down as CEO in early 2022 amid allegations that he misled investors and violated securities laws by inflating metrics during a fundraising effort the last time he ran the company. Kuruvilla left the company, reportedly being fired 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 $30 million the company loaned to Breslow. The matter was later settled after Breslow agreed to repay the money and the company agreed to implement better governance guidelines, Forbes reported in May.
Then last month, Bolt stunned the fintech world with leaked term sheets that revealed it was trying to raise $200 million in equity and an unusual $250 million in “marketing credits” at a valuation of $14 billion. To reach that valuation, Bolt threatened existing investors with aggressive pay-to-play enforcement, demanding that investors provide more cash to buy more Bolt shares at a higher valuation or lose their stake in a deal that essentially costs 1 cent a share. Part of the news about this new funding round included that Breslow was looking to return as CEO.
But Bolt's investors, including BlackRock, haven't taken well to the threats and have reportedly filed for an injunction to block them. Meanwhile, Bolt is threatening to sue Silver Bear Capital, one of the firms that reportedly agreed to lead the new deal. This comes after Brad Pamnani, a partner at the firm, told TechCrunch that Silver Bear was never actually involved in the deal, but rather put it together through a special purpose vehicle managed by a United Arab Emirates-based private equity fund.
Though lawsuit threats and plenty of drama still fly around Bolt's boardroom, at least the chapter surrounding the Fanatics lawsuit appears to be over.