LuLaRoe supplier files new demand for immediate seizure of $34 million and claims the company is quietly liquidating goods
- LuLaRoe's chief clothing supplier, Providence Industries, has demanded that a court immediately seize nearly $34 million in assets from the company.
- The demand, made in court filings on Tuesday, cites testimony from nine former LuLaRoe consultants who claim LuLaRoe collectively owes them more than $63,000 in refunds for unsold inventory that they returned to the company.
- The filings come after Providence Industries sued LuLaRoe for nearly $63 million, alleging the multi-level-marketing company has failed to pay its bills for months.
- James Lee, the co-president of Providence Industries, claimed in new testimony that during a meeting in September, LuLaRoe CEO Mark Stidham allegedly said, "If you don't give me what I need now and take my orders, you guys can take you inventory and shove it up your a**."
- LuLaRoe did not immediately respond to a request for comment on the new filings.
A LuLaRoe supplier has demanded that a court immediately seize nearly $34 million in assets from the multi-level-marketing company while the parties resolve a $63 million dispute.
It's the second time the supplier, Providence Industries, has submitted a writ of attachment, or demand for assets, since filing a lawsuit against LuLaRoe in November claiming the company has failed to pay its bills since May.
A judge previously denied Providence's first request for a seizure of assets. In filings submitted to a California state court on Tuesday, Providence beefed up its initial request with new testimony from nine former LuLaRoe consultants.
The consultants said LuLaRoe collectively owes them more than $63,000 in refunds for unsold inventory that they returned to the company after exiting the business. One woman said she has been waiting 10 months for her refund.
Providence used the testimony to support its claim that LuLaRoe is "insolvent," has a history of failing to pay debts, and is being mismanaged. LuLaRoe did not immediately respond to a request for comment on the new filings.
In addition to seizing assets, Providence wants the court to appoint a receiver to oversee LuLaRoe operations while the legal dispute is settled. It has accused the company's founders, Mark and DeAnne Stidham, of hiding assets in "shell" companies to fund their "lavish lifestyle."
The new complaint claims that LuLaRoe contacted a liquidator in December to sell more than $46 million worth of goods that it had delivered to the company.
"There is an imminent risk" that LuLaRoe executives "will abscond with the proceeds of this liquidation unless they are restrained from doing so," the complaint states.
Providence also reiterated claims in the new filings that Mark Stidham is a flight risk, with reference to testimony from Providence executives and LuLaRoe's former designer alleging that Stidham has threatened to leave the country with his wife and the company's money.
Stidham has denied these claims, saying some of the suit's supporting testimonies are "patently false" and "nonsense."
"To be clear, I do not have, and have never had, any intention or plans of absconding abroad with money," Stidham said in testimony filed in December. "To the contrary, I remain committed to the LuLaRoe business and continue to work daily on the business."
The complaint also claimed that Stidham has shown no willingness to repay alleged debts.
James Lee, the co-president of Providence Industries, said in new testimony that during a meeting in September, Stidham allegedly said, "If you don't give me what I need now and take my orders, you guys can take you inventory and shove it up your a**."
Providence's lawsuit originally sought $49 million in damages. In an amended complaint filed in California state court on Monday, Providence raised the damages sought to $63 million. LuLaRoe has denied the allegations in the lawsuit.
"We believe the claims in this case are completely without merit and will fight vigorously against them," a LuLaRoe spokesman said. "Given this is pending litigation, we cannot comment on the specifics."
The damages Providence is seeking include about $34 million in products it says were delivered to LuLaRoe and never paid for, as well as storage fees for products that LuLaRoe ordered and asked Providence to store.
A hearing on the demand for assets is scheduled for February 7.
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