Inside Track: Fyre Fest Creditors May Get Less Than 4 Cents on the Dollar; Jann Wenner to Publish Memoir
Fyre Fest creditors may get less than 4 cents on the dollar back in bankruptcy case and Jann Wenner is set to publish his memoir, in Billboard's Inside Track.
Edited by Frank DiGiacomo
Fyre Fest Creditors May Be Repaid From a Fund of Just $300K
A handful of creditors in the Fyre Fest bankruptcy may have to live with a share of just $300,000 if a petition filed in federal bankruptcy court in New York by the trustee overseeing the case is approved.
In the four-plus years since the purportedly high-end festival turned into a boondoggle — resulting in a rash of negative publicity, tens of millions of dollars in unpaid goods and services, and a prison sentence for its founder, Billy McFarland — trustee Gregory Messer and his legal team have clawed back $1.3 million from artists, models, private jet companies and other sources paid with money McFarland took from investors for the failed event. And, according to the petition, Messer has asked the court for $1 million in compensation for those services.
If the court approves Messer’s petition, the $1 million will be deducted from the recovered funds, leaving just $300,000 to pay back approximately 300 creditors who filed $36 million in claims against the festival.
Messer’s petition asks the bankruptcy court to exclude the event’s senior creditors from the distribution of remaining funds and instead pay 10 unsecured creditors with $7.7 million in claims against Fyre Fest — the equivalent of 3.8 cents for every dollar spent. The largest payment of $117,000 would go to EHL Funding, which loaned McFarland $3 million, while Paradigm, IMG and the law firm of celebrity attorney Mark Geragos — which led a class-action lawsuit against McFarland — will have to divvy up $89,000. A staging company and an audio rental company that each lost more than $1 million will receive individual payouts of approximately $40,000.
In the petition, Messer writes that the paltry payouts are the result of McFarland having no assets to liquidate. Almost all the money that was clawed back came from companies and individuals that McFarland had paid to stage the event.
Messer also was able to retrieve $341,000 paid to models, including Bella Hadid, Emily Ratajkowski and Hailey Bieber; $539,750 from musical artists slated to perform; and $512,000 from transportation outfits, credit card companies and high-interest lenders.
In his petition, Messer wrote that the bankruptcy case was “problematic and difficult to administer.” The main debtor, McFarland — who was sentenced to six years in an Ohio prison after pleading guilty to three counts of wire fraud, one count of bank fraud and one count of lying to a federal agent — “provided no cooperation” when it came to recovering funds and the festival kept “essentially no books and records.” Messer also wrote that funds McFarland received were “deposited into different accounts” and often “commingled with funds of the principals.”
The little money that was recovered was the result of Messer and his team initiating legal proceedings against 15 entities that argued they should be entitled to keep a portion of what they were paid. They included headliners Major Lazer and Blink-182 as well as the model Kendall Jenner and other social media influencers who promoted the festival online.
Since none of the artists performed, Messer wanted back the large guarantees that the festival had paid to their agencies, which included Paradigm, UTA and CAA, but he noted in the petition that he was able to reclaim just a portion of those advances because of a federal bankruptcy rule known as “the provision of reasonably equivalent value.”
“Most of those artists had strong contracts, blocked out the dates and consequentially forewent other opportunities and spent significant sums in preparation for the performance,” Messer wrote. Even getting Jenner to return some of the $275,000 she was paid for an Instagram post hyping the festival was a difficult legal task.
“While there was justifiably significant public outrage about this payment, the fact is that the payment was at — or even below — market for a social media post by Ms. Jenner,” wrote Messer, “and there was no evidence that Ms. Jenner knew that she was promoting a fraud when she collected the payment.”
As for Ja Rule, Messer found no evidence the rapper “took active part in any fraudulent activity.” —Dave Brooks
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Jann Wenner Takes Another Crack at Telling His Story
After Jann Wenner opened his life and the Rolling Stone vaults to author Joe Hagan for the 2017 biography Sticky Fingers: The Life and Times of Jann Wenner and Rolling Stone Magazine — a book over which Wenner had no editorial control — the media mogul will finally tell his story as he wants it told.
Publisher Little, Brown confirms that it will publish Wenner’s memoir, which has yet to be given an official title, in fall 2022.
Although Sticky Fingers was reviewed positively and covered extensively by the media, Wenner did not like Hagan’s no-punches-pulled approach. In a statement to The New York Times in October 2017, Wenner said, “Rock and roll set me and my generation free musically, socially and politically. My hope was that this book would provide a record for future generations of that extraordinary time. Instead, he produced something deeply flawed and tawdry, rather than substantial.”
In response, Hagan told The Times that Wenner should not have been surprised by the book. “It was all on the table — there’s nothing he didn’t know,” Hagan said. “He’s used to having control, and that’s a difficult thing.” (In an interview with Billboard around the same time, Hagan said Wenner had gone “radio silent” since reading the book and had de-friended him on Instagram. Hagan also said, “I did my job.” )
Sources say that although Wenner has asked Rolling Stone alumni and a number of his famous and powerful friends for feedback on what one describes as a “lengthy” manuscript, they believe the writing is his. And now that he has editorial control, his memoir will tell the story that he had hoped Sticky Fingers would chronicle.
In a statement, Little, Brown publisher Bruce Nichols said, “Jann Wenner’s memoir is a rock-and-roll — and generational — epic like no other. From The Beatles and the Stones to the Boss, from Jackie Onassis to Barack Obama, every rebel and titan of our times comes to vivid life, thanks to Jann’s spellbinding storytelling. We cannot wait to bring it to the world.”
Insiders put the advance Wenner received for the memoir in the high six figures, although Little, Brown declined to comment on the financials.
Wenner declined to comment for this story. Hagan said only: “I look forward to reading it.” —Frank DiGiacomo