It’s curtains for SFX Entertainment’s remaining New York employees, but the bankrupt electronic dance company confirmed on Wednesday that its shows will go on.
This week the company issued a notice through the New York State Department of Labor that all 36 employees at SFX’s Broadway headquarters will be let go in July.
The layoffs are a consequence of SFX’s filing for bankruptcy on Feb. 1, following a failed takeover attempt by founder Robert F.X. Sillerman, who also stepped down as the company’s chief executive on March 31.
The implosion of SFX and the departure of Sillerman — who turned SFX into an EDM powerhouse with annual revenue of $171 million in just two years — had those committed to its upcoming festivals skittish.
But US Bankruptcy Judge Mary Walrath helped allay those fears on April 4 by authorizing an “artist carve out” of $15 million. Those monies are now earmarked for artist payments before they even take the stage.
Headliners are to receive 25 percent of their booking fee before the lineup is announced, 50 percent 30 days before the event and 25 percent before the event takes place.
Court filings inadvertently identified 11 pages of SFX’s summer artists, upsetting a tradition of surprising festivalgoers with unexpected acts.
The exhibit has since been removed — but not before fans learned Dutch breakout DJ Dyro will grace the stage at Something Wonderful on April 23 at Fort Worth’s Texas Motor Speedway and that Mija will appear on May 28 at the Sunset Music Festival in Tampa.
While $15 million is peanuts compared with debt of nearly $500 million when SFX filed for bankruptcy, festival artists and company creditors embraced prepayments to ensure the massive gate receipts a well-attended festival can bring.
Acting on behalf of their artists, such agencies as Paradigm Talent and WME worked out details of the carve out with a surprising amount of cooperation from SFX.
“The profitability of these shows hinges, in significant part, on the artists performing and their ability to attract large numbers of fans,” SFX lawyer Dennis Meloro wrote in a motion advancing prepayments.
From SFX’s point of view, a summer of profitable festivals could accelerate the company’s exit from bankruptcy without having to sell or liquidate additional assets.
SFX is selling off three of its non-festival businesses. The auction of digital marketer Fame House will take place on April 15, online portal Beatport on May 3 and ticketing company Flavorus on May 23.
“There’s no contemplation of selling anything beyond the three companies already set for auction,” a spokeswoman said. “Our plan is to emerge as a going concern.”