LuLaRoe supplier sues for $49 million and accuses the company's founders of hiding assets in 'shell' companies
- LuLaRoe's chief clothing supplier, Providence Industries, is suing the company for nearly $49 million.
- The lawsuit claims the company hasn't paid its bills for seven months.
- Providence Industries claimed LuLaRoe is "insolvent," and accused the company's founders, Mark and DeAnne Stidham, of hiding assets in "shell companies" to fund their "lavish lifestyle."
- The suit claims Mark Stidham said on September 7, 2018: "Look guys, I am not going to pay you guys a f****ing dime unless a judge orders me to pay it, and DeAnne and I will take out two to three hundred million dollars to the Bahamas, and f*** everything."
- Business Insider reported last week that LuLaRoe is facing mounting debt, layoffs, and an exodus of top sellers.
LuLaRoe's chief clothing supplier is suing the company for nearly $49 million in a lawsuit claiming the multi-level marketing company has failed to pay its bills for seven months.
The supplier, Providence Industries, said in the suit that it has reason to believe LuLaRoe is insolvent, and accused the company's founders, Mark and DeAnne Stidham, of hiding assets in "shell companies" to fund their "lavish lifestyle."
The lawsuit identifies 17 limited liability companies that are tied to the Stidhams that were created between July and December 2017. The suit claims the Stidhams have used them to purchase cars worth at least $2.7 million, properties in excess of $7 million, private planes, and other assets.
The suit said the companies are part of a "scheme" to "hinder, delay, and defraud the creditors."
The suit also claims that when representatives from Providence Industries confronted Mark Stidham in September 7, 2018 about bills past due, Stidham allegedly said, "Look guys, I am not going to pay you guys a f***ing dime unless a judge orders me to pay it, and DeAnne and I will take out two to three hundred million dollars to the Bahamas, and f*** everything."
LuLaRoe representatives, including DeAnne and Mark Stidham, did not immediately respond to emails requesting comment.
The suit claimed LuLaRoe has additional debts, including $1 million owed to UPS as well as more than $3.1 million owed to other manufacturers.
UPS did not immediately respond to a request for comment.
Business Insider reported last week that LuLaRoe is facing mounting debt, layoffs and an exodus of top sellers. The company has lost more than one third of its top performers, who generate the most revenue for the company, since July, according to data reviewed by Business Insider.
Meanwhile, hundreds of LuLaRoe sellers - who buy the company's clothing at wholesale prices, then turn around and sell it to customers at a markup - have said they've been waiting months, some more than a year, for refund checks worth thousands of dollars.