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SFX rejects money claims from its founder and former CEO

By | Published on Thursday 13 October 2016

SFX Entertainment

If you thought all the twists and turns that led up to the SFX bankruptcy were entertaining, you just wait till the post-bankruptcy litigation gets underway.

Much of the potential legal action that could be launched in the wake of the SFX bankruptcy will likely involve the dance music firm’s founder Robert FX Sillerman, who stood down as CEO shortly after the firm applied for so called Chapter Eleven protection. Investors in the business will likely go legal (again), plus there could be litigation between Sillerman and his former company.

The all-new hoping-to-come-out-of-bankruptcy-as-a-going-concern-very-soon SFX has already had a bit of a skirmish with its former chief executive, this week filing an objection to claims made by Sillerman for monies to cover legal costs and financial guarantees he made on behalf of the business.

According to Amplify, Sillerman has requested just over half a million to pay the law firm he has hired to represent him in litigation where both he and SFX are co-defendants.

Meanwhile he is also seeking over $15 million in relation to guarantees he made as part of deals between SFX and both Spotify and Chicago-based promoter React Presents. Quite what sums SFX’s creditors will see of unpaid debts depends, of course, on the final terms agreed to take the company out of bankruptcy.

On the latter claims, lawyers for SFX argue that there is no evidence that Sillerman has, to date, made any payments to the beneficiaries of the guarantees, arguing that his claims against the company are contingent on such payments having been made.

As well as seeking to block the claims for legal fees and other cash, the dance music set-up’s lawyers are also opposing several requests made by Sillerman to indemnify himself from future lawsuits in relation to his former business.

So that’s all fun, isn’t it? As previously reported, a court date has been set for next month to formally approve the latest proposals to take SFX out of bankruptcy. The deal will return the business into private ownership, with key money lenders controlling the new company. The judge overseeing the proceedings recently rejected a request by the firm’s former shareholders to have a role in the restructuring of the business.