Huka Entertainment has begun laying off staff as the Pemberton Festival crisis enters its second week, company officials have confirmed to Billboard.
“We had layoffs to scale down appropriately,” CEO Evan Harrison tells Billboard, adding that the company still has “a concert-tour team as well as a scaled-down fest team.” He declined to provide a current employee count.
“We, too, are a vendor of Pemberton who was caught off-guard by this,” he explains.
Harrison and his partner A.J. Niland are fighting for their professional reputations as the Pemberton Festival winds its way through bankruptcy court. Last week, the limited partnership that controls the festival filed for bankruptcy in Canadian court, instructing fans who spent an average $270 per ticket to file a claim as an unsecured creditor if they wanted a refund.
Since then, the firm handling the bankruptcy, Ernst & Young, has released a “credit card contact sheet” instructing fans to begin charging back the purchase to their credit cards. That’s put Pemberton ticketing partner Ticketfly in a difficult position: Company officials acknowledged they sold about $6 million worth of tickets in the two weeks the event was on sale and advanced that money to Twisted Tree Circus, a company controlled by Huka Entertainment, as well as 1115666, controlled by Pemberton investors Amanda Girling, who is the president of the company that owns the land, and Canadian mining executive James Dales with the firm Procon.
Neither Dales nor Girling would comment for this article, but their attorney William Skelly tells Billboard that Twisted Tree was removed from the group that controls Pemberton Festival on April 19.
“1115666 was put in place to give the current directors greater management control and transparency of the financial affairs of the limited partnership,” he explains to Billboard. “The majority of the operating decisions pertaining to the limited partnership were under the direction and control of Twisted Tree, which preceded the appointment of 1115666.”
Less than 30 days later, 1115666 and the limited partnership that controlled the festival had both filed for bankruptcy and ticket holders were told May 18 that there would be no automatic refunds.
“Those funds now form part of the bankruptcy and will be distributed in accordance with the Bankruptcy and Insolvency Act,” Skelly tells Billboard, acknowledging that his client Girling, a director at 1115666, is also a secured creditor in the bankruptcy as the president of Janspec, the festival site landowner.
According to a recent bankruptcy filing, secured creditors are owed $3.6 million, while unsecured creditors are owed $13.2 million. The limited partnership that controls the festival has $6.6 million in assets, including $2.9 million in cash and $2.4 million in property. Since relaunching under the Huka banner in 2014, the festival has lost about $25 million. Instead of potentially taking another $16 million hit in 2017, the organizers placed the festival into bankruptcy two weeks after going on sale.
Marc Geiger, head of music and a partner at WME, said he was outraged by the decision of the festival organizers to file for bankruptcy without obtaining refunds.
“We’re weighing all of our options and plan to pursue whatever legal avenues are available to us,” said Geiger, who represents several acts who were scheduled to play Pemberton and said he is worried that the bankruptcy will have a chilling effect on the concert industry and hurt consumer confidence in music festivals. He said WME has already begun looking at its own festival policies and capitalization requirements.
“We’re definitely going to have something in there that says ‘even if there is a bankruptcy, refunds have to be issued,'” he says. “We can’t have a situation like this again, where consumers are left holding the bag.”