It has finally happened. As we predicted last month, SFX has filed for bankruptcy. The dance music colossus is bust, even though it received $20 million in funding in mid-January. In the end, it turns out, the financial struggles, created mainly by a string of expensive takeovers and a crash of its stock price, the holding has coped with in the last year were irreversible. There are some silver linings to be found, however.
Globenewswire reports that SFX has will undergo a Restructuring Support and Forbearance Agreement including a commitment from the ad hoc group to provide up to $115 million in DIP (debtor-in-possession) financing. This financing, which first needs to be approved by court, will effectively be used to pay off debt obligations and finance ongoing normal course of business like paying artists, partners, venues, vendors and suppliers.
Robert F.X. Sillerman, Chairman and CEO has made a statement after the announcement, saying:
“This expression of confidence from our lenders is testimonial to the vibrancy and potential of our business, and the dedication and professionalism of the over 600 people who make up SFX. Of course this was not where we thought we’d be but with this restructuring we have the opportunity to achieve all that SFX can and will be. I’m looking forward to continuing to be part of the new SFX as Chairman. We will immediately commence a search for a new CEO to lead us as we continue to set the trend in the exploding culture that is electronic music.”
Beatport, one of SFX’s key subsidiaries went ahead an countered any possible worries about the digital music supplier, with a spokesperson declaring:
“For all of us here, it’s just business as usual. That means entire Beatport platform is fully operational without restriction. The store remains open. The streaming service continues uninterrupted. New releases are being added every day. New videos are being scheduled and filmed. Payments to labels and suppliers are ongoing in their usual manner.
“We look forward to SFX successfully navigating this reorganisation, and in the meantime will continue focusing on building the best music experience for the fans, artists, and DJs that make up the electronic music community.”
How this relatively positive spin on SFX’s filing for bankruptcy will play out over a course of a few months will be the greatest test.