Power Balance Sold to Chinese Manufacturer

The Asian consumer markets are next up to test out the timeless sports truism: It’s all in the wrist.

The Chinese manufacturer that made thousands of Power Balance LLC bracelets got court permission to buy the California-based company after no other bidder put in a higher offer. That deal, valued at more than $8 million, enabled Contec Corp. to “buy” the company using a portion of the debt it was owed on a massive shipment of holograph-using bracelets.

The company said in a statement released Wednesday that it will emerge from bankruptcy protection as Power Balance Technologies Inc.

Judge Theodor C. Albert of the U.S. Bankruptcy Court in Santa Ana, Calif., gave his required approval to the deal despite earlier concerns raised by creditors who questioned whether the supplier was really owed that much money.

And the deal, according to California consumer-protection attorney Filippo Marchino, is even more troubling because it puts the new owners in a better position to market the wristbands—which have never been medically proven to strengthen wearers—to Asian consumers who are more vulnerable to alternative health philosophies.

“When you bring this to China where there’s no real consumer watchdog agency…it’ll put these people in the position of making millions of dollars off scamming the Chinese population,” said Marchino, who was in the process of negotiating a $67 million settlement with Power Balance attorney over a consumer fraud lawsuit before the bankruptcy filings halted progress.

Power Balance, which agrees to refund unhappy consumers for their purchases, defended itself in a statement.

“Most consumers in Asia have the option of utilizing both Eastern and Western approaches to health in his/her daily life and tend to have both an open mind and a discerning eye,” the company said. “Power Balance works closely with distributors and regulators to comply with all local laws and we know, as evidenced by our customer base and the extremely low return rate, that the people who buy Power Balance ‘get it.’”

Power Balance filed for Chapter 11 bankruptcy protection in November after consumers grew suspicious of the company’s $30 athletic wristbands, which promise to alter the body’s natural energy flow to make it stronger, well-balanced and more flexible.

But even as health studies struggled to prove these claims, athletes continued to wear them, giving them exposure in Sports Illustrated snapshots and in the game.  The company’s website boasts endorsements from sports stars like NBA Rookie of the Year Blake Griffin of the Los Angeles Clippers, Boston Red Sox second baseman Dustin Pedroia, Los Angeles Dodgers outfielder Matt Kemp and Los Angeles Lakers forward and Khloe Kardashian husband Lamar Odom.

The company said that the bracelets’ popularity grew “not because of advertising or marketing but because people shared their experiences with other people,” according to its statement. “While it’s not for everyone and experiences with the product do vary, Power Balance stands behind the many people who understand what the products are and believe in the performance technologies they provide.”