Business News Legal Live Business Top Stories

All new SFX may sue former management

By | Published on Friday 29 July 2016


Could the all-new, revamped, streamlined, fresh faced, exuberant, exciting, exceptionally well formed and possibly divine SFX focus most its new found energies on suing the old SFX? Well maybe. That would be fun, wouldn’t it?

As previously reported, having abandoned its original plan for getting out of bankruptcy, a new proposal has emerged for the future of the flagging EDM business.

According to the Wall Street Journal, under the new deal, primary creditors Allianz SE and Axar Capital Management LP will take control of the company, with some other small creditors – probably including the founders of some of the companies SFX acquired – given the option to take smaller stakes in the new entity. Former owners, including founder and ex-CEO Robert FX Sillerman, will have no stake.

It’s widely believed that the new owners will then appoint former AEG Live chief Randy Phillips to run the all new SFX, focused on its core festivals business, with dance music digital platform Beatport possibly spun off as a separate company.

But what about the potential for bitter and nasty litigation, that’s why we’re all gathered here today, right? Well, IQ has noted new documents filed with the Delaware bankruptcy courts this week which say that the new owners may seek damages for “breaches of fiduciary duty by former directors and officers of [SFX], and avoidance actions, such as fraudulent transfer claims under federal and state law”.

It is likely that any such claims would focus on the various failed attempts by Sillerman to take the company he floated on Nasdaq in 2013 back into private ownership, and commitments made to SFX by its founder’s other companies. The new owners may also seek to recover “amounts reimbursed to Sillerman” during the bankruptcy process”.

The revised plan for taking SFX out of bankruptcy will go before the judge overseeing the process at the end of next month.