đ¶New Chapter 11 Bankruptcy Filing - Systematic Audio LLCđ¶
Designer, manufacturer, and distributor of high performance audio systems has devastating jury verdict rendered against it, precipitating chapter 11 bankruptcy.
Yo, pop some molly and get ready for an epic dance party.
On June 9, 2026, Tennessee-based Systematic Audio LLC (the âdebtorâ) filed a chapter 11 bankruptcy case in the Western District of North Carolina (Judge Beyer) â something we learned of because it appeared on claims agent Epiqâs website shortly after filing:
With a logo like that, we â really Johnny â were intrigued. We clicked through to the website and saw this:
We literally have no clue what any of that means but it sounded like a good a$$ time, so Johnny was all set to sign up!
Except abort, Johnny, abort â this is one bad motherf*cking trip! That đ doesnât even appear to be the right company, the right logo or the right website!! Someone at Epiq must be tripping balls!!!
Indeed, six days after the filing, the docket started filling out. What did we learn? Well aside from that đ, we learned that this situation is an absolute dumpster fire.
Letâs start with the debtorâs first day declarant, Ryan Strubeck of Ankura Consulting Group LLC (âAnkuraâ), who ⊠lol ⊠got retained on June 9, 2026.* You know ⊠like ⊠the day of the filing, lol. He basically couldnât declare sheeeeeeeyit. The declaration is a whopping seven pages long and does no more than outline the debtorâs capital structure. Which looks like this:
$6.3mm Adjusted Daily SOFR+2.75% August 6, 2030 Term Loan (Key Bank NA);
$12.7mm Adjusted Daily SOFR+2.5% August 5, 2028 LOC (Key Bank NA); and
$6mm 14-15% fixed subordinated notes (Medallion Capital).
A staggering $25mm, đ, not counting $2.5mm in general unsecured obligations and a potential judgment claim of $21.4mm (more on this đ).
Against $55k of cash on hand.
LOL.
Seriously, anyone got that molly â these cases suck.
Of course we were dying to learn more (narrator: actually, we werenât). Enter not another declaration; rather, debtorâs counsel â some firm from North Carolina â filed a âstatement in support of the chapter 11 caseâ to set forth more detail. You donât see that everyday but sh*t be different down south, we âspose. What did we learn?
đThe Company. It is not, despite what was and, as of the date of this writing, continues to be reflected on Epiqâs website, some kind of psychedelic trance DJ duo. Instead it is ââŠa leading designer, manufacturer, and distributor of high performance audio systems for automobiles, including subwoofers, amplifiers, and speakersâ that operates under the âSundown Audioâ brand.** It has over 98k followers on Insta.
đThe Filing. The biz is allegedly fine: the companyâs got positive EBITDA and had been growing.
đBut, Litigation. The debtor lost a jury trial relating to claims of tortious interference, fraud, and unfair and deceptive trade practices in mid-May. âOn June 4, 2026, the Soleymani Litigation Plaintiffs submitted a proposed judgment to the state court asserting damages against the Debtor in the amount of approximately $21.5 million, exclusive of interest and fees.â It turns out that in North Carolina, where the suit was pending and where the debtor owns a 180k square foot commercial property, entry of a judgment triggers an automatic springing lien on real estate!
đLender Action Too. After the jury returned the verdict, both the debtorâs lenders declared various defaults (on June 3rd in the case of Key Bank and June 9th in the case of Medallion Capital).
Cue the bankruptcy. Per the âstatementâ:
âFacing no access to its purportedly overdrawn line of credit, default notices from two separate secured lenders holding asserted claims of approximately $25 million, and imminent enforcement actions from an unsecured litigation claimant holding asserted claims of not less than approximately $21.5 millionâi.e., nearly double the quantum of liabilities the Debtor faced immediately before the jury verdictsâthe Debtor made the difficult choice to commence this chapter 11 case and use the âbreathing spaceâ afforded thereby to stabilize the business, ensure sufficient access to liquidity to fund mission critical disbursements like payroll, customs, and shippers, and ultimately pursue one or more value-maximizing restructuring transactions inside chapter 11.â
Ok, sure.
That breathing space thing only works if thereâs money and $55k sure as sh*t ainât going to cut it, notwithstanding issues as to whose cash that is and who holds it. Luckily on June 15, 2026 â count it, six days after filing â the debtor filed a cash collateral motion. Clearly the debtor didnât have consensual use of cash collateral as of the petition date. Now, however, it has consent through July 11, 2026.
The debtor has also filed an adversary proceeding against the Soleymani Litigation Plaintiffs to stay the state court action.
The debtor is represented by DLA Piper LLP (Benjamin Winger, Stephane Cohen, Eric Goodheart, Erik Stier, Joseph Roselius) and some North Carolina law firm. The debtorâs independent manager is Sandeep Gupta. The aforementioned Ankura parachuted in here at the eleventh hour as financial advisor. KeyBank NA is represented by Verrill Dana LLP (Roger Clement Jr., Lindsay Milne) and Stevens Martin Vaughn & Tadych PLLC (Kathleen OâMalley) as legal counsel. The Soleymani Litigation Plaintiffs are represented by James McElroy & Diehl PA (Richard Fennell, Fred Monroe, Haley Lohr). As of the time of this writing nobody has made an notice of appearance on behalf of Medallion Capital.
*Notably Epiqâs retention letter is dated June 10, 2026 so, in fairness to them, there was plenty of room for error here.
**Note to Epiq: this link has the actual company website and logo. It also happens to be the one cited in the debtorâs petition so weâre not entirely sure how yâall f*cked this up. Weâll just assume someone was rolling.
Company Professionals:
Legal: DLA Piper LLP (Benjamin Winger, Stephane Cohen, Eric Goodheart, Erik Stier, Joseph Roselius, Jacob Clubb, Jeffrey Torosian) and Moore & Van Allen PLLC (Zachary Smith, Hillary Crabtree, Benjamin Shook, James Langdon, Matthew Taylor)
Independent Manager: Sandeep Gupta
Financial Advisor: Ankura Consulting LLC (Ryan Strubeck)
Claims Agent: Epiq (Click here for free docket access)
Other Parties in Interest:
Pre-petition senior secured lender: KeyBank National Association
Legal: Verrill Dana LLP (Roger Clement Jr., Lindsay Milne) and Stevens Martin Vaughn & Tadych, PLLC (Kathleen OâMalley)
Pre-petition second lien lender: Medallion Capital Inc.
Sponsor: XS Investment Intermediate LLC
David Soleymani, Blue Building, LLC, Krubim 26 International, Inc. d/b/a WoofersEtc, Joshua Soleymani and Daniel Soleymani
Legal: James McElroy & Diehl PA (Richard Fennell, Fred Monroe, Haley Lohr)