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SFX wants lawsuit against founder put on hold while bankruptcy goes through motions
By Chris Cooke | Published on Monday 29 February 2016
The bankrupt bass-breaks-n-beats-bastion SFX last week asked the US bankruptcy court to extend the ‘automatic stay provision’ of the company’s bankruptcy protection to its founder and CEO Robert FX Sillerman and several other directors.
Bankruptcy rules Stateside mean that bankrupt companies cannot be sued while in the process of formally trying to rescue their businesses, and existing litigation is usually put on hold too. That protection only automatically applies to the bankrupt company itself, not executives who work there.
However, says SFX, a previously reported shareholder lawsuit targeting Sillerman himself over allegations that the CEO made “materially false and misleading statements” while attempting to take his company back into private ownership a year ago, is proving to be a right old distraction from the important work of restructuring the company “to achieve all that SFX can and will be”.
To that end, Sillerman wants that lawsuit put on hold while SFX is going through the bankruptcy motions. As previously reported, the long-flagging EDM festival promoter and Beatport owner finally applied for bankruptcy protection at the start of this month, with its founder saying the process, while not ideal, would enable his firm “to achieve all that SFX can and will be”.
