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Investors try to bankrupt Fyre Festival company

By | Published on Tuesday 11 July 2017

Fyre Festival

Three financial backers of the disastrous Fyre Festival are trying to have the company behind the abandoned Bahamas music event pushed into involuntary bankruptcy. Good old fashioned chapter seven bankruptcy too, none of that chapter eleven restructuring nonsense.

The three investors who are seeking to bankrupt Fyre Festival LLC through the New York courts are John Nemeth, Raul Jimenez and Andrew Newman who together pumped about $530,000 into the whole Fyre shambles. It’s not clear exactly what involvement the three plaintiffs had in the Fyre venture beyond the sum of money they provided.

As much previously reported, the Fyre Festival was billed as a luxury festival by its founders, Billy McFarland and Ja Rule, and the social media influencers they hired to sell the show.

However, poor planning and bad management meant that the Fyre company hadn’t put in place the infrastructure required for even a very basic music festival, let alone the high end party experience it had promised. The whole thing was called off just as ticket holders started to arrive on the ill-prepared party island.

A flurry of lawsuits have since followed, filed by angry ticketholders, suppliers and investors against McFarland and Ja Rule personally, as well as Fyre Festival LLC and its parent company Fyre Media, which was also developing a talent booking app that the Bahamas shindig was meant to formally launch.

McFarland is also facing criminal charges for fraud in relation to allegations he misled investors and moneylenders about the financial situation of this companies. Prosecutors have alleged that he told two investors that Fyre Media had already done millions of dollars of business when it had, in fact, generated revenues under $60,000. It’s also claimed that he altered financial documents in a bid to woo investment.

It’s not entirely clear what assets, if any, the Fyre companies still possess – we just know that an awful lot of money was pumped into the operation.

One source speaking to Law 360 says that the bankruptcy proceedings launched by Nemeth, Jimenez and Newman are mainly about trying to force some clarity onto the company’s affairs, to try to figure out where all the money went. If they find it, investors and creditors can then try to get at least some of their cash back.

Law 360 quotes said sources as follows: “The only things publicly known are what an FBI agent said in the indictment. Hopefully more will become known once the ball gets rolling, and we can eventually claw back some money and distribute it to the creditors”.

Back in the Bahamas, officials continue to distance themselves from the whole Fyre fracas. As previously reported, back in May the Chief Councillor of the island that hosted the festival, Great Exuma, told local media that while his council did give the necessary permission for the Fyre Festival to go ahead, it was the Bahamas’ Ministry Of Tourism which led on all the dealings and conversations with the event’s management team.

Now Dionisio D’Aguilar, the new tourism minister for the Bahamas, appointed since the whole Fyre Festival debacle, has defended his department, saying that the ministry of tourism “is as much a victim in this as the attendees”.

In a recent interview with Bahamas-based newspaper The Tribune, D’Aguilar said that, despite the tourism ministry offering support to the Fyre companies, they were excluded from the festival site in the run up to the event.

He said: “The organisers of the festival, according to our people, were very reluctant to give them access to the site. They were assured the organisers had it covered. It was only on the day people arrived that they had access to the site and saw that the things promised were not in place. The ministry then stepped into action to get those people out as quickly as possible, working at the airport”.

Admitting that the high profile collapse of the Fyre event was “a PR nightmare for the Bahamas”, he nevertheless defended officials at the tourism agency. “If anybody comes to the Bahamas and wants to stage something, the ministry puts forward its people to assist in getting all the requirements and permits in place for it to work”, he said.

“They do this time and time again for many festivals and conferences down here. I don’t think anybody realised the fall-out would have such an effect on the Bahamas. The ministry is as much a victim in this as the Bahamas is a victim in this, and as the attendees. I’d like to think the Bahamas is an unwitting victim”.