Bank of America is pursuing the assets of Madwell following repeated missed loan payments.
Breaking Bank: Bank of America Takes On Madwell
In a striking turn of events, Bank of America is going toe-to-toe with embattled ad agency, Madwell, and its other associated entities over a whopping $4 million loan default, alongside missed post-settlement payments. The drama unfolds in the U.S. District Court for the Eastern District of New York.
Court documents revealed between January and March, Bank of America petitioned the court to issue a judgment against Madwell and its assets—a blunt move indicating that Bank of America wants to seize anything of value pledged as collateral to help repay the outstanding debt.
Last spring, Bank of America sued Madwell, Millwright (Madwell's fabrication company), Get In Get Out, and Maple Syrup and Jam (doing business as Starfish). The entities were accused of defaulting on a staggering $4 million loan, led by Madwell's CEO, Chris Sojka—a man whose aggressive behavior and extravagant spending have coincided with Madwell's money woes.
By October 2024, the total outstanding balance amounted to approximately $4.59 million, including interest, late fees, and legal fees. Barely a month before, Sojka had secured a loan to purchase a $17.5 million private jet—a questionable move given Madwell's struggles to maintain timely payroll, as previously reported by ADWEEK.
Following a court-approved settlement on November 7, 2024, Madwell and its affiliates were required to repay Bank of America in installments. Unfortunately, they missed their payments due on November 30 and December 31, as well as their December interest payment.
According to the settlement terms, Bank of America claims these delinquent payments constitute a breach, enabling the bank to seek immediate judgment and seize collateral. As of January 6, Madwell and the other defendants were $4.1 million in arrears, with interest regularly accumulating at about $1,385 per day.
Bank of America is now pressing the court to enter a judgment and authorize the seizure of collateral to secure the loans. Sojka, however, asserts previous executives are responsible for Madwell's debt and maintains that the company has been diligently paying off its obligations, totaling over $2 million to date.
However, Bank of America remains tight-lipped on the issue, refusing to comment. Lawyers representing the bank at Chapman and Cutler have yet to respond to requests for comment.
Uncovering the Madness Behind the Chaos
The legal battle between Bank of America and Madwell stems from a 2021 credit facility increase, initially endorsed by Madwell's former CFO and partner. This decision has since led to the organization's present financial quandary.
As the court case proceeds, it remains unclear whether Bank of America will succeed in seizing Madwell's assets, engage in further settlement negotiations, or witness Madwell undergo financial restructuring to address its debt. Either way, the case serves as a stark reminder of the consequences of financial mismanagement and extravagant spending when businesses find themselves in distress.
- The interest on Madwell's outstanding balance of approximately $4.59 million, which includes late fees and legal fees, has been regularly accumulating at about $1,385 per day.
- Bank of America is seeking a court-approved judgment that would allow them to seize collateral pledged as security for the loan, due to the defaulting and missed post-settlement payments by Madwell and associated entities.
- Madwell's former CFO and partner endorsed a 2021 credit facility increase, which has since led to the organization's current financial difficulties, forming the basis of the legal battle with Bank of America.
- Lawyers representing Bank of America at Chapman and Cutler have yet to comment on the ongoing legal proceedings between the bank and Madwell.
- Sojka, Madwell's CEO, maintains that previous executives are responsible for the company's debt and denies financial mismanagement, despite allegations of aggressive behavior and extravagant spending contributing to Madwell's financial struggles.
- The financial industry, including banking and insurance, watches closely as the legal battle between Bank of America and Madwell unfolds, examining the potential consequences of financial mismanagement and the impact on future business dealings.
