Adidas Fails to Win Court Order Re-Freezing $75M Held by Kanye’s Yeezy Brand
Written by djfrosty on May 30, 2023
A Manhattan federal judge has denied a request by Adidas for an emergency order re-freezing $75 million held by Kanye West’s Yeezy brand, rejecting the sneaker company’s concerns that the disputed money might disappear.
Days after Judge Valerie E. Caproni lifted a months-long freeze on Yeezy’s accounts, she refused on Tuesday (May 30) to impose a temporary restraining order that would have immediately locked up the money again. Adidas argued that it faced “irreparable harm” without such an order as Yeezy was nearing insolvency, but the judge was unswayed.
“It is hereby ordered that … Adidas’s motion for a TRO is denied,” Judge Caproni wrote in her order, which was obtained by Billboard.
While still a loss for Adidas, Tuesday’s ruling only denied the emergency motion; Adidas can still win a more conventional order in the coming days reimposing an asset freeze on Yeezy. Both sides are due to file briefs on that request by Thursday.
Neither side immediately returned requests for comment.
Adidas, which operated a lucrative sneaker partnership with West for nearly a decade, was one of many companies to terminate its relationship with the embattled rapper (sometimes known as Ye) last fall in the wake of his antisemitic statements and other erratic behavior.
Shortly after the split, Adidas secretly filed a case in federal court to freeze $75 million in Yeezy assets. Adidas believes West’s company is contractually required to return the funds and has filed a private arbitration case to recover them. The company sought the court order to ensure that the money was not moved while those proceedings play out.
Newly-unsealed court records show that Judge Caproni quickly granted the asset freeze in November. But last week, after Yeezy’s attorneys challenged the order, she lifted it — ruling that Adidas had run afoul of procedural requirements and “deprived” Yeezy of a fair chance to fight back.
Just hours after that decision was issued, lawyers for Adidas filed their emergency request to re-freeze the assets. They argued that Yeezy currently holds $75 million “to which it has no legal right,” and warned that a court order was needed to maintain the status quo.
“Yeezy is likely to comingle the funds with an unknown balance of funds in its possession at other financial institutions, such that it would be more difficult if not impracticable to audit those accounts and determine which monies are owned by Adidas,” lawyers for Adidas wrote. “In addition, Ye faces a clear risk of insolvency, giving rise to a risk of irreparable harm.”
Tuesday’s ruling rejecting that motion came after a live hearing in Judge Caproni’s courtroom. According to a report by Bloomberg, the judge said during the hearing that while Adidas would likely win its arbitration case against Yeezy, it had not met the difficult legal requirements for a temporary restraining order. Among other things, the judge reportedly said that Adidas had offered only “tabloid speculation” about Yeezy’s risk of insolvency.
The newly-revealed litigation with Yeezy is just one piece of a messy breakup for Adidas. The split contributed to a loss of $655 million in sales for the last three months of 2022, helping drive the company to a quarterly net loss of 513 million euros ($540 million). Last month, CEO Bjorn Gulden said the company would begin selling $1.3 billion worth of unsold Yeezys, but would “donate money to the organizations that help us and were harmed by what Ye said.”