New producers paying some old BottleRock debts

175 creditors still owed $4.5 million by BR Festivals
2014-03-15T17:18:00Z 2014-05-01T14:28:20Z New producers paying some old BottleRock debtsJENNIFER HUFFMAN Napa Valley Register
March 15, 2014 5:18 pm  • 

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.”

Copyright 2015 Napa Valley Register. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

(22) Comments

  1. michaelholcomb
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    michaelholcomb - March 15, 2014 6:21 pm
    Let me see if I got this right.... If you have leverage and can prevent Bottle Rock from doing its show this year you get paid 100%, City of Napa, Fairgrounds etc. If you have no leverage and are only one of the poor souls that have their work unpaid, you need to wait for the Court to see if they can return some of the money... But the one person that they seem to be able to look to for three million dollars is now an equity partner so that is off the table.
    Are you serious? This is not only crazy but seems to be the most unfair settlement I have ever seen. When this gets to court it is going to be fun watching. What ever happened to integrity and honesty? I guess when their is an opportunity, then opportunistic people will pounce. Pay everyone what they earned and then and only then has it been done correctly. The City of Napa should not allow this kind of treatment to continue.
    Michael Holcomb
  2. nvcal
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    nvcal - March 15, 2014 6:54 pm
    Didn't BottleRock2013 ask for donations at one point to keep everything running? I think I remember something on patch or Napa Valley Register coming up about donations.

    I wonder how long the promoters of 2013 were planning to do this? It seems as though they had everything planned out but are acting like they are clueless. I really hope they get nailed in court.

    Having worked at BR2013 I know that no one was paid our credit card tips that we earned due to "computer issues". No one got their credit card tips the first day. What did they do with that money? I don't care for the money now but they need to pay up to the businesses that they owe to.
  3. Michael Haley
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    Michael Haley - March 15, 2014 8:39 pm
    Michael Holcomb, I had the opposite reaction but after reading your comment perhaps you are right. Initially I felt what they were doing was great--when have you ever seen a business pay off someone's debt that they didn't have to? My impression is that they did not have to pay for any of this but are doing it for the community, as they said.

    However, perhaps you are right and they are simply paying off who they need to pay to be able to do BR14.

    I would like see further clarification of this question.
  4. michaelholcomb
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    michaelholcomb - March 15, 2014 8:52 pm
    If these people are going to take this Bottle Rock Festival forward then do the right thing and make everyone whole and dontt talk about the numbers which are crazy.... Just do the right thing and be 100% transparent. Is your actions like you are such good guys and are saving anything, just pay what ever is owed 100% and then you have the right to be model citizens Right now you are getting everything at our expense. This is crazy...
  5. ValleySwag
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    ValleySwag - March 16, 2014 1:42 am
    Michael is absolutely right. The people that got paid had to be paid to go forward with BR14. But here's the thing, didn't Latitude 38 just a few weeks ago tell the city they owed them nothing? So why have they changed course and paid it? Who in their right mind would pay hundreds of thousands of dollars to settle a debt that wasn't theirs? If I was a creditor I would try to leverage this fact. If Latitude 38 is accepting responsibility for some of the debt they should be on the hook for all of it.

    This festival shouldn't happen until everyone has been paid. Sadly, palms have been greased and the show will go on. Screw all the people that actually put in the hard work last year I guess.
  6. vocal-de-local
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    vocal-de-local - March 16, 2014 1:46 am
    Or....they could have started over with an entirely new name such as BottlePop 2014 and no one would have made an issue about repayment.

    I'm a bit perplexed as to why they would pay so much for a title with baggage?

  7. Crosscountrykid
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    Crosscountrykid - March 16, 2014 7:01 am
    I'm not an MBA or business person, but when one business entity purchases another, doesn't it usually purchase/assume the brand, the assets, AND the liabilities? I'd be real curious to see the legal paperwork detailing the purchase (or transfer) between BR and Lat 38. When someone of my limited capabilities has a lot of questions, I've learned there's a whole lot more under the radar. I get the impression Lat 38 said to BR (aka Batman and Robin), we'll give you some money for the brand only (because the net worth is negative). Then Lat 38 pays the creditors who have the go/no powers. The rest of the creditors are dealt with on an ad hoc basis. It just doesn' make sense. The on-going lack of transparency is still troubling.
  8. Wineandfood
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    Wineandfood - March 16, 2014 7:55 am
    It's not their job to make last years festival, produced by a different company, whole. It's their job to make this year work. And of course they are only paying other peoples debts when forced, how in the world will it work otherwise?
  9. Sickothis
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    Sickothis - March 16, 2014 11:03 am
    This is about the most innane set of comments I have ever seen here.

    L38 paying the City and Expo was not only expected, but required. Paying the riggers - expected and required.

    Michael Holcolmb, of all people, you know how to do a deal to get it done. Don't be silly.

    One more precious tidbit - Green Mary Zero Waste Events of Santa Rosa wringing her hands because she isn't listed in the bankruptcy proceeding? Of course she isn't listed. She's a subcontractor. The primary contractor has the liability.

    I'm amazed at the level of incompetence and lack of business acumen on everyone's part.
  10. FAndrews
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    FAndrews - March 16, 2014 3:18 pm
    It's all smoke and mirrors. L38 is trying to make it look like they are being the good guys by paying off some of BR2013 debt. In reality they are offering as little as 30% of what was owed from BR2013 in exchange for those individuals/entities willing to work BR2014. This is not being done as an act of kindness but a desperate move to get BR 2014 up and running. Believe me if they needed the vendors for BR 2014 you'd have received a phone call. It's a take it or leave it deal, settle for pennies or get whatever you can from bankruptcy and work 2014. But you won't get paid up front, you just have to "trust" the new owners. Laughable. Fool me once shame on you, fool me twice, shame on me. Don't drink the koolaid!
  11. Bauhausfan
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    Bauhausfan - March 16, 2014 5:48 pm
    Michael H is correct.

  12. Bauhausfan
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    Bauhausfan - March 16, 2014 5:59 pm
    There is nothing inane about pointing out that the only debt being paid off from last year are people who are critical to this years festival and have to be paid off.

    I have no problem with this.

    But to try and paint it as being "benevolent" and we didn't "need" to do this is completely disingenuous. It's called being honest. And after last years disaster it just adds to the smell.

    They did need to either pay off Saratoga or as they did make them partners in this years festival.

    They did need to pay off the Union for the stagehands or there wouldn't be a festival this year.

    The same goes for the city and the Expo.

    Are they paying off people they don't need? No, they aren't.
  13. Bauhausfan
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    Bauhausfan - March 16, 2014 6:24 pm
    "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."

    Pure nonsense. Again, be honest. No creditor still owed money is going to be helped by what L38 has done because BR Festivals has no assets. What little of worth was already bought by L38 for 600k.

    This is a business but please stop with the absurd PR nonsense about the debts L38 had to pay off as somehow being for the community good.

  14. FAndrews
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    FAndrews - March 16, 2014 7:26 pm
    My understanding is that BR 2013 had a contract and deposit with the fairgrounds and in order to get that they had to take over BR 2013. The only equity from BR 2013 was the deal with the fairgrounds. Also, weren't some of L38 people involved with BR 2013, seems to me I remember reading posts from Mr. Scoggins early on defending the actions of BR 2013.
    Personally, I don't want 2014 to fail and would get no pleasure from it. However, this just seems to be heading down the same path. BottleRock is a tainted brand at best, anyone with serious business/entertainment expertise would start with their own brand instead of trying to right a sinking ship.
    To the 2014 vendors/workers, get clad contracts and/or cashier's checks and get your money up front. Would you offer terms or get uncertified funds up front with a new unproven entity? I sure wouldn't!
  15. FAndrews
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    FAndrews - March 16, 2014 10:26 pm
    As a side note, according to the BR Napa face book page: "Use ROCKNAPA promo code to get your fan discount on 3 Day festival passes". So hmmm if they are already discounting the ticket prices, just wait they are going to be papering Napa with free tickets just to get people through the gates, just like BR2013. If your going to go, stay tuned I'm sure more discounts will follow. Another sign that BR 2014 is in the weeds. Wonder how many of those $3,000 Platinum tickets have been sold. Unfortunately, it's starting to have shades of last year.
  16. Michael Haley
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    Michael Haley - March 16, 2014 11:08 pm
    I don't see why they just didn't create a whole new festival then. Is the BR name that valuable? Perhaps so.

    I agree wineandfood that they have no obligation for debts they did not incur. The only thing I can think is that the Expo and City would not permit it without that. If so the Expo and City are wrong. It's different people, different business. No other business would have to do that, pay off someone else's debt.
  17. Loco Yokel
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    Loco Yokel - March 17, 2014 5:10 am
    You would use a different name than the one who owes a debt
  18. Old Time Napkin
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    Old Time Napkin - March 17, 2014 6:57 am
    As Yogi Berra said "it's deja vu all over again".
  19. Punk Rocker
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    Punk Rocker - March 17, 2014 10:04 am
    Everybody has it wrong. Here's how the court process works. Let's start with the $4.5 million owed. Looks like the new guys are paying off about a million of it, which leaves $3.5 million to go. The bankruptcy court will require the investors who took money out to return it. Vogt boosted out $700,000 or so, either to himself and for that deposit on the Uptown where this paper reported he signed as both the buyer AND the seller. Next, Johnson will need to return the $3 million he took out on the eve of the festival. That means $3.7 million will be available to pay off all remaining creditors (except of course -- after atty fees). What leaves all of us scratching our heads is: why did Vogt boost out the critical funds he needed to make this thing a success? I thought he was a "successful businessman". Or is there even something else we all don't know......,
  20. AttenUnpaidBRNVStaff
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    AttenUnpaidBRNVStaff - March 17, 2014 4:24 pm
    The brand value of "Bottlerock" is in the amazing line up they had in 2013. There is value in the cache of the Napa Valley but the lack of population and a real festival site is a big obstacle in my experience. In the end, fans will show up if the line up is great. The line up speaks for itself.
  21. Bauhausfan
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    Bauhausfan - March 17, 2014 8:04 pm
    I actually thought the platinum ticket price had to be a typo. Do you actually think anyone has bought any?
  22. FAndrews
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    FAndrews - March 19, 2014 10:39 pm
    I'm not following Punk Rockers logic on this one. Why would Johnson have to pay back the $3 million he was paid? $2 million was money he invested and $1 million was his ROI. If he forced to pay it all back then he will be out his initial $2 million investment. He has built a gorgeous DeVille theatre in downtown Vacaville. Is he supposed to sell that to pay back money that he lent BottleRock? That does not make sense to me. Also what about all of the money from the auction and eBay sales, where did that go? Where's all the signed posters and guitars that were in Bob's office? Where did they go?
    What about Gabe, are we to believe that he did not take/pay himself any money? Who lived in the house that they rented for a month for the band members? The gig was only five days and the house was rented for a month? I'm sure there are more shenanigans that will surface in the following months. Where are all champions of Gabe and Bob and how they were such pillars of the community?
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