Andretti Autosport

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Report: hhgregg group sues Andretti Autosport over payments

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On Friday, a group representing hhgregg has filed a lawsuit against Andretti Autosport, and seeks to regain $1.5 million in sponsorship, via a report in the Indianapolis Business Journal.

The group is called the Official Committee of Unsecured Creditors of Gregg Appliances Inc., which was formed in March to recover what are known as “preferential payments” to creditors.

The suit says hhgregg made four money transfers to the team between December 1, 2016 and February 1, 2017, which totaled more than $1.5 million.

Per the suit, the hhgregg sponsorship amount paid to the team would be $2.75 million annually for one car, and the company was labeled as a “co-primary sponsor” signed to a multi-year deal (revealed in the suit as a two-year deal from 2017 to 2018). It had had a prior business relationship with Andretti Autosport in an associate and occasional primary sponsor role as well in 2016.

The company filed for bankruptcy in March, then closed all its stores shortly thereafter.

The hhgregg signage appeared on Marco Andretti’s car in preseason testing and the season opening race in St. Petersburg, but was withdrawn after that race.

The suit claims the first payment to the team was “preferential” as Michael Andretti was part of hhgregg’s Board of Directors, but in a statement from Andretti Autosport, that claim is denied.

A statement from Andretti Autosport supplied to NBC Sports reads as follows:

Andretti Autosport 2, Inc. (“AA2”) has learned, based on recent press reports, that the Official Committee of Unsecured Creditors of Gregg Appliances Inc. (“Committee”) initiated a lawsuit against AA2 on November 17, 2017 in the United States Bankruptcy Court for the Southern District of Indiana.  The Committee’s lawsuit is an attempt to “claw back” or seek the return of sponsorship fees properly paid to AA2 pursuant to valid written sponsorship agreements between it and hhgregg.

Despite the Committee’s claims, the sponsorship payments were not “preferential” because they were made in the ordinary course of business and according to ordinary business terms and, therefore, are not subject to claw back.

AA2 provided rights, benefits, and services pursuant to the sponsorship agreements, which were entered into prior to Michael Andretti joining the hhgregg Board of Directors.  As a result, he had no influence, control, or management over the business affairs of hhgregg or the payments made to AA2 under the sponsorship agreements.  Accordingly, AA2 intends to vigorously defend against the claims made in this matter.