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SFX gets access to its bankruptcy loan

By | Published on Friday 5 February 2016

SFX Entertainment

Party time at SFX then! Albeit a bankruptcy party. That’s the best kind of party though, I reckon. Yes, a judge has approved a bankruptcy loan being made to the flagging EDM company by the money-lenders who are planning to take the firm back into private ownership and swap their debts for equity.

As previously reported, the long struggling EDM giant finally applied for Chapter 11 bankruptcy protection on Monday, having called in consultants last month in a last ditch attempt to rescue the company. Under the proposed bankruptcy, an “ad hoc group” of bondholders will write off debt, provide short-term financing, and then take ownership of the dance music festival promoter and Beatport operator.

The short-term financing is a $115 billion bankruptcy loan which will be used to pay off some of the lenders outside of restructuring arrangement, and to provide cash flow for the company’s ongoing expenses. According to the Wall Street Journal, a bankruptcy judge gave permission for $80 million of that funding to be handed over on Wednesday. The company was also given interim approval to pay utility bills, critical vendors and employees.

According to the Journal, we now know that unsecured creditors and equity holders in the SFX parent company are unlikely to “receive a recovery”. Though the biggest of those equity holders, founder Robert FX Sillerman, will have a stake in the new private company that should come out of the bankruptcy proceedings.

As previously reported, SFX insists that it is business as usual at its various subsidiaries as all this goes through the motions, and that once the all-new parent company is up and running, cut free of all its debts, everything will be rosy again. Though if all else fails, Deadmau5 has offered fourteen million for “whatever is left” of SFX, in a tweet that noted Sillerman had said in 2012 “I know nothing about EDM”. “Yeah… We see that”, adds the producer.