SFX Encounters a Surge of Objections to Its Bankruptcy Plan

by San Antonio Attorney

SFX Entertainment encounters problems as it attempts to exit from Chapter 11 bankruptcy.

About 6 entities have opposed to the bankruptcy plan of the EDM giant, which intends to give immunity to the employees, continuously pay the handlers of its bankruptcy and bestow SFX authority to cancel agreements and contracts without scrutiny.  On Nov.  1, Google, Mastercard Europe, Viagogo and Salesforce.com filed objections to the bankruptcy plan.

The disputes involve “third-party non-debtor releases” – which is a provision that protects current and former workers from legal responsibility to any party that has sought a claim in the case.  Even though the company’s plan doesn’t identify individuals, SFX seeks to shield all of company’s affiliates, partners, and all former and current directors, members, officers and managers.

Not included from that release of legal responsibility is ex-Chairman and CEO Robert Sillerman, general counsel Howard Tytel and ex-vice chairman Mitchell Slater.  Currently, creditors are still allowed to sue them.  But U.S.  Trustee Andrew Vara was unsatisfied saying that the broad releases of legal responsibility are normally forbidden under the bankruptcy law.  In addition he questioned the continued confidential payments to the bankruptcy case’s administrator, such as FTI Consulting.

Another issue that was raised was the $125,000 IRS payable.

Online ticket seller Viagogo opposed to a provision that provide SFX an unlimited time to cancel or assume contracts.

Viagogo wants SFX to reveal their intentions right now.  Mastercard Europe’s legal representative also opposed to SFX’s timetable for handling contracts, saying that the provision is an inappropriate leverage approach which in effect makes contractual counterparties captive to their conceits on an unlimited basis.

The surge of objections forced SFX to request for an extension until Dec.  31 to submit a revised bankruptcy plan.  The company is expected to leave bankruptcy in March 2017.

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