Armadillo Distribution Enterprises - Chapter 11 Case Summary

Business Description

Headquartered in Tampa, FL, Armadillo Distribution Enterprises, Inc. ("Armadillo"), together with Concordia Investment Partners, LLC ("Concordia," and together with Armadillo, the "Debtors"), operates an established musical instrument enterprise. Armadillo was founded in 1994 and, for more than thirty years, has been a recognized participant in the musical instrument industry, designing, marketing, distributing, and selling guitars, percussion instruments, and related musical products throughout the United States and internationally.

Armadillo's operations are centered around five principal brands, which collectively serve multiple segments of the musical instrument market, including electric guitars, acoustic guitars, ukuleles, premium custom-built American-made instruments, electronic drums, acoustic drums, and boutique archtop jazz guitars:

• Dean Guitars®: One of the most recognized guitar brands in the industry, serving as Armadillo's principal volume business through domestic dealer relationships, international distribution channels, and direct international sales.
• Dean USA Custom Shop®: Produces premium made-to-order American-built instruments for professional musicians, collectors, and specialty dealers.
• Luna Guitars®: A rapidly growing brand focused on acoustic guitars, ukuleles, and artistically designed instruments that appeal to a broad demographic of musicians and consumers.
• ddrum®: Armadillo's percussion brand, which includes both acoustic and electronic drum products.
• Stromberg Guitars®: A boutique premium archtop guitar brand serving professional musicians and collectors.

Concordia is a Florida limited liability company that serves as the intellectual property holding company for the Debtors' enterprise, owning trademarks, trade names, copyrights, licensing rights, domain names, and related intellectual property rights associated with the Debtors' brands.

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Corporate History

The Debtors' business was built by Pamela Keris-Rubinson's late husband, Elliott P. Rubinson ("Elliott"), a successful entrepreneur and innovator in the musical instrument industry who spent decades building businesses associated with the design, manufacture, marketing, distribution, and sale of guitars, bass guitars, acoustic guitars, percussion products, and related accessories. Through his efforts, Elliott developed and acquired several internationally recognized musical instrument brands and established a global network of dealers, distributors, manufacturers, artists, and industry relationships that continue to form the foundation of the Debtors' business today.

• During Elliott's leadership, Armadillo transformed from a regional business into an internationally recognized musical instrument company. Dean Guitars was acquired in 1997 and restored as a nationally recognized guitar brand.
• In 2005, the Debtors acquired ddrum and expanded it into a full-line percussion business, while also launching Luna Guitars, which has become a recognized lifestyle-oriented musical instrument brand.
• These brands collectively represent decades of investment, customer goodwill, artist relationships, trademarks, and intellectual property that constitute a substantial portion of the Debtors' enterprise value.

Ownership and Governance

Armadillo is a corporation duly organized and existing under the laws of the State of Florida. As of the Petition Date, Pamela Keris-Rubinson is the sole director and Chief Executive Officer of Armadillo, responsible for managing its operations and restructuring efforts. The Pamela A. Rubinson Marital Trust (the "Marital Trust"), of which she is Trustee, holds the 100% interest in Armadillo.

• Concordia is a limited liability company duly organized and existing under the laws of the State of Florida. As of the Petition Date, Ms. Keris-Rubinson is the Chief Executive Officer of Concordia and responsible for managing its operations and restructuring efforts.
• The Marital Trust and the Pamela Anne Keris-Rubinson Living Trust (the "Living Trust"), of which she is the respective Trustee, collectively hold 75% of the membership interests in Concordia. By virtue of such ownership interests, she possesses the authority to authorize actions on behalf of Concordia, including the commencement of these chapter 11 cases.

EPR Investments Chapter 11 Filing

Related entity EPR Investments, L.C. ("EPR") owns the warehouse where Armadillo operates its business. On April 10, 2024, EPR was required to file for chapter 11 relief before this Court, In re EPR Investments, L.C., Case No. 8:24-bk-01969-CPM.

• The primary reason for the EPR filing was a foreclosure suit commenced by Valley National Bank, in which Evan Rubinson and Ms. Keris-Rubinson were active interested parties. The EPR case and the Armadillo and Concordia cases involve common, similar, and overlapping facts and issues.
• On August 20, 2024, the Court entered an Order directing the parties to mediation, as a result of which the parties were able to resolve some disputes and narrow others. Among other things, the loan on the property was refinanced, including through Ms. Keris-Rubinson's contributions; Evan dismissed his suit against Armadillo and Ms. Keris-Rubinson without prejudice; and the EPR chapter 11 case was dismissed on April 5, 2025.

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Operations Overview

Armadillo operates from its headquarters and primary distribution facility located at 4904 West Waters Avenue, Tampa, Florida (the "Property"), which is owned by affiliate EPR. The facility consists of approximately 111,000 square feet of office, warehouse, distribution, and operational space and serves as the central hub for the Debtors' business operations.

Armadillo maintains relationships with more than 400 dealers, distributors, manufacturers, suppliers, artists, and business partners worldwide. The Debtors' products are sold through domestic dealer networks, international distribution relationships, direct international shipments, and direct-to-consumer sales channels.

• The Debtors continue to maintain longstanding relationships with major domestic and international dealers, distributors, and retailers, including some of the largest musical instrument retailers in the United States, as well as direct relationships with overseas manufacturers and international distribution partners.
• The Debtors' brands enjoy significant recognition within the music industry and have been used, promoted, and endorsed by numerous professional musicians and recording artists. Maintaining these relationships is essential to preserving the Debtors' going-concern value and the continued viability of the business.

Enterprise Value and Workforce

The Debtors' value extends well beyond inventory and equipment. A substantial portion of enterprise value is derived from customer relationships, dealer relationships, trademarks, artist endorsements, intellectual property, brand recognition, and goodwill developed over decades of operations.

• As of the Petition Date, the Debtors employ approximately 25 employees engaged in sales, marketing, operations, inventory management, artist relations, customer support, product development, and administrative functions, and maintain inventory, intellectual property, customer relationships, and business operations that continue to generate ongoing revenue.
• The Debtors also maintain an active backlog of customer orders exceeding approximately $2.5 million, reflecting substantial existing customer demand for the Debtors' products and providing visibility into future revenue generation notwithstanding the financial and litigation challenges described herein.

Intercompany Licensing

Among Concordia's most significant assets are intellectual property rights associated with Dean Guitars®, Luna®, and ddrum®. These intellectual property assets constitute the foundation of Armadillo's business operations and represent a substantial portion of the Debtors' enterprise value.

• Concordia licenses its intellectual property to Armadillo for use in connection with Armadillo's business operations. As a result, the operations and value of Armadillo and Concordia are closely interconnected, and preservation of Concordia's intellectual property is critical to the success of any restructuring.
• On May 1, 2012, Armadillo and Concordia agreed to amend the licensing agreement to reduce royalty fees from 2.5% of gross sales to 0.0% of gross sales. As such, the Debtors have operated under the licensing agreement without paying for or receiving licensing fees for over 14 years.

The Debtors state that they continue to operate an active and viable business with recognized brands, ongoing customer demand, valuable intellectual property, and established industry relationships, and that their five-brand portfolio provides diversification across multiple product categories and customer segments. Based upon Ms. Keris-Rubinson's experience operating the Debtors since June 2022, she firmly believes the Debtors possess substantial going-concern value that materially exceeds the value that would be realized through a forced liquidation of assets.

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Prepetition Obligations

Prior to the commencement of these chapter 11 cases, the Debtors' capital structure consisted primarily of secured indebtedness asserted by Valley National Bank ("Valley Bank"), together with ordinary-course trade debt, litigation-related obligations, and other operational liabilities.

Valley Bank Credit Facility

• Valley Bank contends that a predecessor institution originated a loan to Armadillo in January 2011 in the original principal amount of approximately $7.5 million to provide working capital for Armadillo's business operations. Over time, the lending relationship between Armadillo and Valley Bank evolved through various amendments, modifications, renewals, and restructurings.
• By 2020, the relationship had been restructured into a revolving working-capital facility in the principal amount of $4.1 million that became a primary source of liquidity for Armadillo's ongoing operations.
• Prior to Ms. Keris-Rubinson taking control of the Debtors, Armadillo and Valley Bank entered into a revolving line of credit facility. In connection therewith, Armadillo executed a Revolving Promissory Note in the original principal amount of $4.5 million, together with a Loan Agreement and related loan documents. Concordia executed guaranty and collateral documents in support of the credit facility.

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Events Leading to Bankruptcy

On June 9, 2026 (the "Petition Date"), each of the Debtors filed a voluntary petition for relief under chapter 11 of title 11 of the United States Code in the U.S. Bankruptcy Court for the Middle District of Florida, Tampa Division. The Debtors continue to operate their businesses and manage their affairs as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code.

According to Ms. Keris-Rubinson, due to the fraud and breaches of fiduciary duties of her son Evan Rubinson ("Evan") when he was in control of the Debtors prior to June 10, 2022, she was denied meaningful access to the Debtors' financial information, banking records, books and records, and operational information. Many of the facts described in the Declaration were discovered only after she assumed control of the Debtors, removed Evan from his positions, and caused an investigation to be conducted that revealed the extent of the alleged misconduct.

Discovery of Evan Rubinson's Alleged Fraud and Fiduciary Breaches

• Following Elliott's passing in February 2017, operational control of the Debtors was entrusted to Evan, who was given an opportunity to continue and expand the family businesses consistent with Elliott's wishes. During that period, Ms. Keris-Rubinson was not involved in the day-to-day management of Armadillo or Concordia and relied substantially on information provided by Evan and other members of senior management.
• Soon after Evan took the company's reins at age 25, Armadillo's financial condition began to suffer. Whereas Armadillo had enjoyed historically high annual revenues under Elliott's operation, during Evan's tenure as President and CEO starting in 2017, Armadillo's financial performance steadily declined.
• Ms. Keris-Rubinson became increasingly concerned and repeatedly sought access to company records, banking information, financial reports, and operational information from both Evan and Valley Bank. Despite being the Trustee of the sole shareholder of Armadillo, she was repeatedly denied meaningful access, and she later learned that Evan had instructed Valley Bank not to provide her with information concerning Armadillo's accounts and finances.

On June 10, 2022, in her capacity as Trustee of the Elliott P. Rubinson Revocable Trust (which held the 100% interest in Armadillo at that time), Ms. Keris-Rubinson fired Evan as the Debtors' CEO, assumed operational control, and immediately engaged forensic accountants to investigate Evan's management of the Debtors. The investigation revealed alleged misconduct by Evan and the company's former CFO, Ross Sacco:

• Evan and Sacco allegedly grossly mismanaged Armadillo and "looted" the company by, among other things, engaging in waste and dissipation of corporate assets for their own personal benefit, including taking exorbitant pay, misappropriating funds from the company's bank account, taking reimbursements for expenses having nothing to do with Armadillo's business, and causing settlement payments that belonged to the Debtors to be misdirected to Evan individually.
• Evan and Sacco allegedly engaged in significant bank fraud, including by fraudulently reporting fake sales, accounts receivable, income information, and inventory information on Armadillo financial statements provided to Valley Bank. The forensic report concluded that, for the 2018 through 2020 period alone, Evan caused Armadillo's net sales and net income to be overstated by approximately $8.9 million and $4.7 million, respectively.
  • This caused Valley Bank to lend far more than was required, burdening the Debtors with unnecessary debt and leading to costly and damaging litigation with Valley Bank. Evan and Sacco then allegedly improperly issued exorbitant bonuses to themselves based upon that fraudulent reporting.
• Based upon the forensic investigation and the Debtors' continuing review of historical transactions, the Debtors have identified substantial causes of action against Evan and Sacco, including breach of fiduciary duty, aiding and abetting breach of fiduciary duty, corporate waste, recovery of unauthorized transfers, diversion of corporate opportunities, and related claims. Concurrently with the commencement of these chapter 11 cases, the Debtors are commencing litigation seeking to recover damages arising from this misconduct.

Valley Bank Litigation

Prior to removing Evan in June 2022, Ms. Keris-Rubinson, as an authorized signatory on the Armadillo bank accounts, repeatedly requested that Valley Bank provide access and information regarding Armadillo's finances and accounts. Valley Bank refused to provide her with the Debtors' account information, even for a period after she removed Evan. According to the Debtors, by blocking her access, insight, or visibility into Armadillo's banking activities and financial accounts, Valley Bank substantially assisted Evan in his alleged fraudulent conduct and breaches of fiduciary duty.

• Shortly after Ms. Keris-Rubinson confronted Valley Bank with its allegedly improper business and banking practices, Valley Bank manufactured defaults against the Debtors and EPR, accelerated the loans, and filed foreclosure litigation, notwithstanding that the Debtors contend the loans were not in default. The Debtors characterize the lawsuit as retaliatory and improper and assert it has caused them enormous damage.
• As a result, the Debtors asserted counterclaims against Valley Bank for damages relating to breach of contract and for aiding and abetting conversion and breaches of fiduciary duty. As part of that litigation, Valley Bank amended its complaint to sue Evan for fraudulent inducement and misrepresentation, based on the banking fraud Evan allegedly committed while in control of the Debtors, including his fraudulent manipulation and inflation of Armadillo's financial statements, his submission of forged supporting documentation, and his creation of fake and inflated values for Armadillo's accounts receivable. Those claims overlap with the claims the Debtors own and have contemporaneously brought before the Court by way of a separate adversary proceeding.
• Valley Bank's asserted claims and liens affect substantially all of the Debtors' operating assets and cash flow. The Debtors dispute the validity, extent, priority, enforceability, and amount of Valley Bank's asserted claims and liens, and believe substantial defenses, counterclaims, offsets, and affirmative claims exist. Accordingly, while the Debtors seek authority to use cash collateral to preserve going-concern value, they reserve all rights concerning Valley Bank's asserted secured status and claim amount.

Ongoing Litigation with Evan and Path Forward

Upon being ousted from the Debtors and following the discovery of his alleged fraud and misconduct, Evan went on a litigation spree, filing no fewer than 7 separate lawsuits in just the three-year period between 2022 and 2025 against Ms. Keris-Rubinson, the various trusts, and Armadillo and Concordia, both individually and derivatively. Among these, Evan commenced a derivative suit on behalf of Concordia against Armadillo for payment of royalties he knew had been waived. This litigation has created a substantial drain on resources and an enormous distraction from the Debtors' efforts to reverse the harm Evan allegedly caused.

• Since 2022, the Debtors and related parties have been involved in multiple complex litigation proceedings involving lender claims, ownership disputes, fiduciary duty claims, intellectual property issues, licensing disputes, trust and estate matters, and commercial claims, requiring the expenditure of substantial sums on attorneys, accountants, consultants, experts, forensic professionals, and other advisors, and consuming an extraordinary amount of management time and attention.
• According to the Debtors, the principal issues facing them are not a lack of customer demand, a failed business model, or an inability to generate revenue. Rather, the Debtors' financial distress is primarily the result of lender litigation, ownership disputes, management-related controversies, legacy liabilities, and the substantial professional fees and operational disruption associated with those disputes.
• Through these chapter 11 cases, the Debtors intend to stabilize operations, preserve and maximize the value of their intellectual property and other assets, pursue valuable estate causes of action, resolve pending litigation, restructure secured indebtedness, and formulate a plan of reorganization or other value-maximizing transaction for the benefit of creditors and stakeholders.

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First Day Motions

In connection with the commencement of these chapter 11 cases, the Debtors filed several First Day Motions seeking narrowly tailored relief intended to preserve operations, maintain customer and vendor confidence, protect employees, and prevent immediate and irreparable harm to the Debtors' businesses and estates. The Debtors' ability to successfully reorganize depends upon maintaining uninterrupted business operations immediately following the commencement of these cases.

• Cash Collateral Motion: The Debtors seek authority to use cash collateral generated from ongoing business operations in accordance with a Court-approved budget to fund payroll, inventory purchases, vendor obligations, utilities, insurance, and other ordinary-course operating expenses. The Debtors propose to provide replacement liens and such other adequate protection as the Court determines appropriate, while reserving all rights concerning the validity, extent, priority, and enforceability of any asserted liens.
• Payroll Motion: The Debtors seek authority to continue paying employee wages, salaries, payroll taxes, employee benefits, and related obligations in the ordinary course of business, as the Debtors' employees are essential to maintaining customer relationships, processing orders, managing inventory, supporting distribution operations, and protecting intellectual property.
• Critical Vendor Motion: The Debtors seek authority to pay certain prepetition obligations owed to vendors and suppliers whose goods or services are essential to ongoing operations and whose refusal to continue doing business with the Debtors could result in immediate and irreparable harm, including specialized manufacturers, suppliers, logistics providers, and technology providers.