While planning the return of BottleRock this May, the festival’s new promoters have worked behind the scenes to pay off a substantial part of the debts incurred by the old promoters.
Latitude 38 Entertainment said it has eliminated more than $4.6 million, or about half the debts belonging to BR Festivals, the group that put on last year’s five-day event.
Latitude 38 did not have a legal obligation to do this, said David Graham, one of the four Napa partners behind the return of BottleRock. In January, his group bought BR Festivals’ assets and the BottleRock name, but not its debts, he said.
“It’s the right thing to do for our community,” Graham told the Register. “While our investment may not pay off this year, it is the best decision for the long term.”
Graham would not break down how the former promoter’s debts have been eliminated or reduced.
“The details of each agreement is confidential at this time,” but details will be shared as the bankruptcy proceeds, said Graham.
Apparently, most of the debt wiped out by Latitude 38 — $3 million — belonged to Saratoga Festival Investments, which had invested in BR Festivals.
Saratoga, which had filed a lawsuit seeking the return of the $3 million, has been made an equity partner in Latitude 38 in exchange for withdrawing its claim.
“Saratoga is a minority shareholder in Latitude 38 as a result of having released their claims against BR Festivals,” Graham said in an email.
An attorney for Saratoga Festival Investments did not return a call for comment.
Latitude 38 has also made arrangements to settle BR Festivals’ debt with the city of Napa, which was owed $106,730, and the Napa Valley Expo, which was owed $310,938.
In addition, Latitude 38 has “satisfied” $500,000 of the $630,000 in wage and benefit claims from the International Alliance of Theatrical Stage Employees union, said John MacConaghy, BR Festivals’ bankruptcy attorney.
Jim Beaumonte, president of the union’s Local 16, did not return a call for comment on this story.
Both the city and Expo held leverage over the new promoters.
The city threatened not to issue a special-event permit unless BR Festivals’ debt was cleared up.
Similarly the Expo said it wouldn’t rent the fairgrounds for a repeat of BottleRock unless it was paid in full for last year.
Participation by the stage employees union is also considered key for a return of BottleRock.
It appears that the vast majority of businesses owed money by BR Festivals will have to rely on the outcome of BR Festivals’ bankruptcy case if they are to receive payment. More than 175 creditors are owed $4.5 million, according to court documents.
These creditors should benefit from Latitude 38 shrinking BR Festivals’ debts by more than $4.6 million, according to Graham.
Saratoga Festival, as a “secured” creditor, had a higher priority claim to any money recovered by the bankruptcy court than the unsecured creditors who represent the bulk of claimants.
Graham would not say which BR Festivals creditors have been asked to work with this year’s festival.
Greg Frizzie, owner of Dependable Tire Solutions in Richmond, provided more than 15,000 gallons of fuel for all the generators at BottleRock 2013.
BR Festivals owes him $107,000 for his services, Frizzie said in an interview. Latitude 38 has not offered him any payment toward his 2013 debt and “no one has called me” about working at the 2014 festival, he said.
The business owner, who works at dozens of such outdoor events a year, said he is still upset about what happened in 2013 and isn’t optimistic about those vendors getting paid.
“I’ll feel hopeful when someone gets a check,” Frizzie said.
Mary Munat of Green Mary Zero Waste Events of Santa Rosa provided all the “greening” services at BottleRock 2013.
She said she is owed $27,000, but to her dismay she isn’t listed on BR Festivals’ creditor list because she was a subcontractor for a different BR Festivals creditor. She hasn’t been approached by Latitude 38 either, she said.
“I wrote to the new folks that I would welcome the opportunity to bid if they paid me for last year,” said Munat.
She got no response, she said, and no offer to pay any of her debt from last year. “Now I have to find out how I get attached to the bankruptcy,” she said.
John Russo of Better Foods Deli in Roseville said his business served almost 2,000 meals and other food at the 2013 festival. His deli was paid about $3,000 but is still owed $7,500 for its services, he said.
“That’s the biggest event we did all year,” Russo said of last year’s BottleRock.
He hasn’t had an offer from the new promoters to pay any of the old promoters’ debt, he said.
Hugh Linn of Riechers Spence & Associates said his firm is owed $57,000 for work on BottleRock 2013.
His firm was paid 30 to 40 percent of its total bill by BR Festivals, he said.
Although his firm has not been offered any payment from Latitude 38, Riechers Spence has accepted a retainer to work on BottleRock 2014, he said.
“We want to see the event succeed” and be something that is well planned, said Linn. “We think it’s an important event to help downtown succeed.”
Linn said his firm participated in last year’s BottleRock with “eyes open.”
“We know that first-year festivals often have financial challenges. We knew there was an amount of risk. We made a conscious choice” to participate, he said.
BottleRock 2014 is set to return to the Expo, having announced a lineup of performers for a three-day festival: May 30, May 31 and June 1.
Headliners include the Cure, Outkast and country singer Eric Church.
“We are very proud of the work that we have accomplished to date,” said Graham. “We are focused on delivering a stellar lineup, getting tickets on sale and moving forward with a fantastic 2014 festival. We are very grateful for support from the community and fans that want to see BottleRock succeed.”