Earlier yesterday, on November 21, 2022, Foxconn filed a lawsuit against Tonal, alleging that Tonal is defaulting on payments owed to Foxconn.
The lawsuit was filed in the US District Court of Northern California, and was given Case #3:22-cv-07341-TLT. The plaintiff is Hon Hai Precision Industry Co., Ltd – who is known internationally as Foxconn. They are a manufacturing company that make electronic components for a number of companies around the world, including Apple.
The lawsuit states that Foxconn began shipping electronics & goods for Tonal starting around October 2020. It goes on to state that since that time, Foxconn has delivered more than $191 million worth of Tonal gyms & accessories. However, starting around March 2022, Foxconn alleges Tonal began defaulting on some of the payments owed to Foxconn:
On or about March, 2022, Tonal became increasingly in arrears for finished goods, semi-finished goods, and various components Hon Hai manufactured for and delivered to Tonal.
Foxconn goes on to share that by July 28, Tonal owed Foxconn at least $5 million – at which point the two companies entered into a Memorandum of Understanding for the payments. The MOU stated that Tonal would start paying Foxconn $100,000 weekly, until the $5 million was repaid – which would accrue a 1% interest until the amount was repaid.
However, according to Foxconn, Tonal failed to make one of their weekly payments of $100,000 by November 4th, 2022. The next day, Foxconn notified Tonal of this default and demanded payment.
The suit then alleges that Peloton then missed weekly payments on November 11th and November 18th as well.
Based on these missed payments, Foxconn filed a lawsuit in court.
At the time of publishing, Tonal had not yet responded to the complaint.
Earlier this year, Tonal laid off around 35% of its workforce in an attempt to cut costs and achieve profitability.
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