SFX Entertainment has been thrown another lifeline. The judge in a Delaware bankruptcy court has approved the bondholders’ plan that puts SFX on a tight budget but gives it the capital needed to continue operations.
The court granted SFX access to $80 million of the $115 million debtor-in-possession financing, a form of financing during a bankruptcy that has seniority over other debt. A source with knowledge of the situation tells Billboard roughly $23 million has been earmarked for operating expenses. The remainder will be used to pay off Catalyst Fund, which loaned it $20 million last month, and other senior lenders.
Robert Sillerman will remain the company’s chairman but will be replaced as chief executive. A source says the company has started working with an executive search firm and aims to find a new CEO within 60 days.
The bankruptcy is creating some unrest in the artist community. Responding to rumors it might have difficulty paying royalties to labels and artists, Beatport, SFX’s download/streaming service, explaining that Chapter 11 restructuring helps ensure vendors receive payment, Beatport said it paid royalties last week and “intends to continue doing so as usual.” Setting aside the differences between Chapter 11 restructuring and Chapter 7 liquidation, worries about royalties aren’t completely unfounded. Last year, Beatport blamed a “going private” process — one of two that didn’t materialize — on a delay in processing royalties.
Earlier this week, EDM producer/DJ Deadmau5 went to Twitter to ridicule Sillerman for telling Billboard in 2012, “I know nothing about EDM.” “Yeah….we see that. All Good. I’ll throw you 14 million for whatever’s left if you want?” he wrote.