The company that organized the canceled Washington DC Marathon has filed for bankruptcy, court documents show.
H2O Entertainment and its president, John Stanley, faced at least two class-action lawsuits from runners who sought to immediately recover their entrance fees, which the Arlington, Va.-based company had said would be applied to next year's event. The bankruptcy filing will make it difficult for the 6,801 runners, who paid from $65 to $95 each, to recover more than $400,000 in fees, said William Claiborne, an attorney for one of the runner's groups that filed suit.
"I think this was bad news for people who gave their money in good faith to the company," Claiborne said.
On March 19, H2O cited security concerns when it canceled the March 23 race because of the impending U.S. war in Iraq. But District officials said they had not been consulted and questioned whether organizers had enough money to stage the event. In its filing Thursday, H2O listed $68,950 in assets and $1.3 million in liabilities, according to court documents.
"How much debt would they have had had they not received the $400,000 in entry fees?" Tony Bulloch, spokesman for Mayor Anthony Williams, said yesterday. "The security of the race was not the issue. This company had gotten itself into significant financial trouble."
Calls to H2O executives were not returned. Stanley was unavailable to comment.
Bulloch said the city might order an investigation into the race.
Two weeks ago, The Washington Post reported that Stanley, a former employee of the newspaper's advertising division, had pled guilty to second-degree theft in 1996. Steptoe and Johnson, a Washington-based corporate law firm, alleged that Stanley, who worked in the firm's accounting department, had used fraudulent cashier's checks to buy $41,200 worth of the company's travelers checks, according to court records. Stanley received a suspended sentence and a year's probation.
In an interview two weeks ago, Stanley, 34, called the incident "a dumb thing, a youthful indiscretion."
This is the latest blow to a race that District officials had hoped would one day approach the success that other cities, such as Boston, New York, Los Angeles and Chicago, have achieved with marathons.
Last year's event was troubled by logistical and marketing missteps by H2O, an events planning company that had never staged a marathon or athletic event.
A week before this year's race, Stanley told a group of runners that it would be run "no matter what." After the cancellation, many runners were irate that the decision had been made independently and some ran the course March 23 on their own.
"It just didn't make sense that they were canceling for the safety of the runners," said Deon Snare, 40, of Alexandria who paid $85 to enter and spent five months in training. "It didn't make sense that they didn't consult with the mayor's office."