Bankruptcy can strike any kind of business operation. While most people think of bankruptcy as a remedy for failed manufacturers or sellers of manufactured goods, the recent business bankruptcy of a Kentucky music festival that never opened its doors illustrates how ventures featuring popular performers and good food can fail.
In 2015, a group of persons associated with the Bottlerock Festival in Napa Valley, California announced plans for a similar festival at the Kentucky Speedway in Sparta, Kentucky. The festival, titled “Ni-Fi Music Fest,” was supposed to include more than 40 popular music artists, including Green Day, Miranda Lambert, Hank Williams, Jr. and others. The event was touted as providing a wide array of popular food. The festival was intended to occur during August 2015, but the promoters announced its closing and impending bankruptcy before the festival got underway.
According to recent filings in the bankruptcy court, the festival possessed assets valued at $5.1 million and owed liabilities of $5 million. For example, Green Day was paid $1.8 million, Miranda Lambert received $1 million and Hank Williams, Jr. was paid $122,500. Only a small number of performers agreed to repay a portion of their advances, leaving only a small sum to pay creditors. After payment of filing fees and attorney’s fees, only slightly more than $700,000 was available to pay creditors’ claims. Sixteen investors, mostly residents of Texas, paid sums ranging from $100,000 to $1 million to fund the enterprise. Because the festival was liquidated and not reorganized, these investments presumably became worthless.
Investors and creditors of speculative ventures such as a music festival face a relatively high probability of losing money. Anyone who has made such an investment or who has sold goods and services to the promoters may wish to consult a knowledgeable bankruptcy attorney for advice on their rights in the event the enterprise fails.
Source: Napa Valley Register, “Kentucky festival launched by Napa Valley man completes bankruptcy,” Jennifer Huffman, April 22, 2017
