A major Pacific Northwest lobbying and public affairs firm has wrapped up its bankruptcy with a reorganization that will pay off debtors, including $6 million owed to its estranged former co-founder.
Seattle-based Strategies 360 filed for Chapter 11 bankruptcy protection in November — a move prompted by a rancorous financial dispute between CEO Ron Dotzauer and his ex-business partner Eric Sorenson.
The case spurred widespread chatter in Northwest political circles given the reputation of Dotzauer, a cowboy-hat-wearing veteran Democratic political consultant from Snohomish County with ties to prominent elected officials.
Dotzauer managed U.S. Sen. Maria Cantwell’s upset 2000 win over then-incumbent Sen. Slade Gorton, and has been a featured local TV political analyst in recent years. During a celebration of his 50 years in local politics in 2021, he was feted by Gov. Jay Inslee, Lt. Gov. Denny Heck and other politicians.
Dotzauer owed Sorenson more than $6 million after agreeing in 2018 to buy out his former partner’s 49% ownership stake in the firm, which the two men had co-founded in the early 2000s.
After years of trying to collect the money, Sorenson sued Dotzauer and Strategies 360 last July in King County Superior Court.
In October, a judge awarded Sorenson a judgment of nearly $6.2 million, and appeared to be on the verge of appointing a receiver to take over management of the company’s finances and potentially sell its assets to pay off creditors.
Dotzauer and Strategies 360 filed for bankruptcy protection to avert a receivership, describing it as a “strategic” move to resolve the dispute while keeping the company afloat.
The firm employs some 140 people with offices in 13 states, Washington D.C., and Vancouver, B.C. It works as a lobbying, politics and public affairs firm and received more than $3.4 million from federal lobbying clients in 2023, including electric utilities, tribes and some city governments, according to OpenSecrets.
The case had slogged through federal bankruptcy court for months, with an array of lawyers for the company and creditors maneuvering to come out ahead.
To resolve the disputes, a final Chapter 11 reorganization plan was filed May 10 in U.S. Bankruptcy Court for the Western District of Washington and approved by Judge Timothy W. Dore.
Under the plan, Strategies 360 will stay in business while paying off its debts under a tightly controlled schedule overseen by an independent director.
In addition to Sorenson, the firm’s major creditors include KeyBank, which is owed more than $3.7 million for a business line of credit. It also owes $2 million to John Oceguera, former speaker of the Nevada Assembly, who runs the firm’s Nevada operations.
The reorganization plan also requires the company to be sold to employees in 2024 through an employee ownership stock plan. It’s unclear from the final bankruptcy resolution filings whether Dotzauer would retain some ownership. (At the time of the bankruptcy, he owned 95% of the company.)
A Strategies 360 spokesperson noted in an email that Dotzauer had announced his support for an employee-ownership stake in the company in 2023 “well prior to the Chapter 11 filing.”
Dotzauer will remain as CEO, but his compensation will be limited under the debt-repayment plan. His gross pay will be capped at $460,000 per year until the KeyBank debt is paid off. After that, he’ll be limited to $640,000 until debts to Sorenson and other creditors are paid.
Dotzauer previously had been paid more than $1 million annually, plus $63,000 in car and boat payments, a perk that will cease under the reorganization plan, which also requires board approval for all of his expense reimbursements.
In an interview, Sorenson called the resolution of the case “bittersweet” but said he’s glad he’ll finally get paid by his former business partner.
“This guy is a bully who’s gotten away with it for his entire life and there is some satisfaction here that there is closure and the courts have finally held him accountable,” he said. “It’s sad that it had to go this route.”
Sorenson will be paid $40,000 per month beginning in July under the final repayment plan, rising to $128,000 per month after the KeyBank debt is paid off and to $253,000 per month after other company debts are retired.
Dotzauer declined an interview request but issued a statement through Strategies 360.
“This is a positive outcome for the firm and we are eager to move forward while continuing to deliver exceptional results and improving the communities in which we work,” he said.
Dotzauer previously had accused Sorenson of mounting a vengeful and bad-faith takeover bid after being forced out as the firm’s president for “performance issues.”
To guard his personal assets, Dotzauer also filed for personal Chapter 11 bankruptcy protection in January — a case that remains ongoing.
Sorenson said despite the acrimonious split, he’s rooting for Strategies 360 to refocus and prosper under new leadership, in part to ensure he finally gets paid.
“I hope the company does well,” he said.
This report includes material from The Seattle Times archives.
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