A judge in British Columbia has ruled against a Ticketfly request to recover $3.3 million from the trustee overseeing the Pemberton Festival bankruptcy, arguing Ticketfly did not prove its misconduct claims against investors who controlled the festival near Whistler, which had been revived in 2014 with the help of Huka Entertainment. Ultimately Pandora will cover the millions in losses, part of a deal it made with Eventbrite in 2017 following the $200 million sale of Ticketfly.
The decision makes it highly unlikely that fans will receive refunds for the hundreds of dollars spent on tickets to the failed event, which was to be headlined by Chance The Rapper, Muse and A Tribe Called Quest near the base of Canada’s Mount Currie, July 13-16.
The surprise demise of Pemberton last May was a cataclysmic event in the music industry, coming just weeks after the high profile implosion of Fyre Festival. Marc Geiger, head of Music at WME, called the bankruptcy “fraud, pure and simple,” and warned, “the only difference between Pemberton and Fyre is that Pemberton sold their event with trees instead of supermodels.”
By declining to hand the remaining funds over to Ticketfly, Vancouver judge Paul J. Pearlman made it very unlikely that fans who bought tickets will receive refunds, although earlier this year, Amplify learned that 80 percent of fans have gotten their money back through chargebacks to their credit cards. Fans who did not charge back their tickets can now apply for compensation as an unsecured creditor to what’s left of the Pemberton estate.
In denying a request by Ticketfly attorneys to form a constructive trust around the $3.3 million generated from 2017 ticket sales, Pearlman said Ticketfly couldn’t show that PMFLP or 111 B.C. Ltd., the two companies used by Canadian investors to control the festival, committed fraud when it accepted $7.8 million in advances from Ticketfly before placing the festival into bankruptcy.
Ticketfly has “not shown misconduct on the part of either PMFLP or 111 B.C. Ltd. in obtaining the ticket sale proceeds,” Pearlman wrote. “The debtors’ estates have not been unjustly enriched, nor do other extraordinary circumstances exist” to allow Ticketfly access to the funds ahead of other creditors, vendors & suppliers.
The ruling makes it unlikely that Ticketfly will recover the $6 to $8 million it likely lost on the festival. Pandora, which owned Ticketfly during the May 2017 Pemberton bankruptcy, has agreed to cover the losses, part of a deal it made with Eventbrite following the sale of Ticketfly less than a month later.
“As part of the transaction between Pandora and Eventbrite, Pandora agreed to assume responsibility for any and all obligations of Ticketfly resulting from these bankruptcies, including the costs associated with the chargebacks paid by Ticketfly, and was assigned any recovery that Ticketfly may be entitled to in these bankruptcy proceedings,” Jeremy Liegl, the Assistant Secretary of Pandora, wrote in an Aug. 16 affidavit.
The two Canadian entities that own the festival are controlled by Amanda Girling, CEO of Janspec, which manages the Sunstone Ranch where Pemberton festival takes place, as well as the Turner family which owns the site, mining company boss Jim Dales and French investor Stéphane Lescure.
In 2013, the investors formed a limited partnership with Huka Entertainment to relaunch Pemberton. The first year, the festival lost $16.9 million, and $16.8 in 2015. In 2016, the festival had an average daily attendance of 38,423 and $15.2 million in sales but ultimately $14 million in losses.
As the losses continued to mount, the Canadian investors moved to push Huka Entertainment out of the picture. While demanding that Huka sell its stake in the festival, the Canadian investors began selling presale tickets to the festival as early as Feb. 23.
After weeks of pressure to step down and prolonged negotiations, Huka Entertainment quietly relinquished its role as General Partner for the festival but did not notify Ticketfly or the major talent agencies it had contracted with to book Pemberton. Making things worse, an audit of the festival’s finances revealed “that the Festival was in worse financial shape than Huka had initially represented to the Canadian Investors,” according to Pearlman’s Dec. 29 ruling.
“Because (the festival) continued to hold a significant amount of funds (largely consisting of ticket sale proceeds), the Canadian Investors decided that rather than expend the remaining funds in circumstances where the Festival was not sustainable, they should put all of the assets into the hands of the Trustee,” Pearlman wrote. On May 16, the remaining backers of the festival voted unanimously to place the event into bankruptcy.
The bulk of the $3.3 million left in the trustee account will likely be paid out to the investors controlling the account since they are listed as the sole senior creditors. Updates on the bankruptcy can be found here.