Emak Worldwide recently filed for bankruptcy due to a $2.5 million verdict against the company in the ad agency’s long-running battle with its former chief executive for control of the business.

Emak Worldwide filed a voluntary Chapter 11 bankruptcy Aug. 9 in Los Angeles federal court. The company owns four marketing agencies, including Equity Marketing, its L.A.-based promotional product shop. All the agencies are expected to continue normal operations during the reorganization process.

“We have a problem at the holding company which has absolutely no connection to our agencies’ day-to-day operations,” Jim Holbrook, Emak’s chief executive, said in a statement. “The (bankruptcy) will allow us to resolve these issues in an organized manner and to put them behind us.”

The problem was a $2.5 million award that the Delaware Chancery Court demanded from the company in July. The demand is the latest development in a nearly yearlong legal battle for control of the board between the present management and Don Kurz, its largest shareholder and former chief executive.

“Emak concluded that its stakeholders would be better served by commencing a bankruptcy proceeding than reducing its cash assets through payment of the interim award,” the company said in a statement. “Emak intends to seek reversal of the interim award and to permanently resolve the litigation.”

Kurz and his group Take Back Emak lost a legal bid for control of the board in April. However, Kurz won a separate lawsuit contesting Emak's conversion of non-voting preferred shares to voting common shares. The court ruled the conversion was illegal and ordered Emak to pay Kurz $2.5 million to cover attorney fees and court costs. Emak has appealed the decision.

In quarterly results announced June 9, Emak reported a net loss of $4.7 million, but blamed much of the losses on the legal battle. It spent $1.9 million on legal fees in the quarter.

Emak is represented in the bankruptcy by law firm Irell & Manella in Newport Beach.

Calls to the firm were not returned.

Sweet Acquisitions

Aisle 9, a marketing and design firm in Commerce that specializes in product packaging, drew the cherry assignment of selling Smith Bros. cough drops and the rest of the brands of F&F Foods.

The Smith Bros. brand, which dates back to 1877, was owned by F&F Foods in Chicago until April, when the company’s assets – including Smith Bros. – were purchased by GemCap, a private equity fund in Santa Monica.

The new owner hired Aisle 9 to modernize all the former F&F brands, which include Daily C vitamins and Sen-Sen breath mints. Aisle 9 has developed a strategic plan for each product.

“We grew up with brands like Smith Bros., Daily C and Sen-Sen,” Aisle 9 President Greg Feinberg said in a statement. “Our goal is to rebuild brand equity in each division and ultimately increase sales at F&F.”

Senior Moments

Inter/Media Advertising will promote the launch of Seniors for Living, a free web service that helps the elderly and their family members find living arrangements.

On the Seniors for Living website, users can research and compare senior living options including independent living, assisted living, retirement living, home care and Alzheimer’s care. The seniors or their families can then connect with the facility directly through the site.

Encino-based Inter/Media has produced 60-second direct-response TV spots that will be shown on cable and broadcast syndication.

Agencies & Accounts

Wongdoody in Culver City is the new ad agency for Activate Drinks, a bottler of vitamin-enhanced water based in West Hollywood. Estimated billings on the account range from $7 million to $10 million. … Phelps Group in Santa Monica has hired DJ Grimes as interactive art director. Previously, he was interactive art director at Web Advanced. Grimes will work on ads for the agency’s accounts with Public Storage, Monrovia and City of Hope. … B2B public relations agency Olmstead Williams Communications in Westwood has landed two new clients, the Alfred Mann Foundation and Health Enhancement Products. … Encino-based media buying agency WorldLink has hired Jessica Ohana as senior account executive. She will focus on infomercial advertising sales, especially in religious programming. Ohana also serves as president of the trade group Direct Marketing Advertising Community. … Levine Communications Office in West Hollywood has signed mixed-martial arts star Tito Ortiz as a client. … Posterscope, a billboard and sign advertising consultancy in Los Angeles, has added Natalie Payne to its staff as director for the West Coast. She will oversee campaign planning for regional accounts, including Coca-Cola, Nickelodeon, Virgin America and University of Phoenix. Payne previously worked at Saatchi & Saatchi LA, TBWA/Chiat/Day, McCann-Erickson and Ground Zero Advertising. … San Diego-based Freeline Sports has hired JMPR Public Relations in Woodland Hills to handle media relations with publications, shows and websites in the extreme sports, regional and national media markets. … Media Innovations Summit has engaged Bob Gold & Associates in Torrance to promote its upcoming conference on monetizing digital media. The event will take place at Directors Guild of America headquarters in Los Angeles on Sept. 27-28.

Staff reporter Joel Russell can be reached at jrussell@labusinessjournal.com or at (323) 549-5225, ext. 237.

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