Updated at 4:45 p.m. — In a move anticipated for months, BR Festivals LLC, the entity that produced BottleRock 2013, filed for Chapter 11 bankruptcy protection Wednesday in the Northern District of California U.S. Bankruptcy Court.
According to court documents, BR Festivals accumulated $4.5 million in liabilities and has assets of $610,000.
The filing details the financial distress the producers, Bob Vogt and Gabe Meyers, faced after the May 2013 music festival.
With tens of thousands of people attending the five-day event at the Napa Expo, the festival had a total of $11.2 million in gross receipts, “not including food and beverage” funds due from one contractor, the documents indicate.
However, BR Festivals “sustained financial losses of approximately $8 million for the initial 2013 event,” and had no source of capital to pay its creditors and fund a 2014 event, said documents.
According to the bankruptcy filing, Vogt and Meyers “exhaustively pursued a number of potential buyers and joint venture partners without success” during the second half of 2013.
Later, a new group of producers, Latitude 38 Entertainment, stepped forward and agreed to buy the BottleRock production rights, other intellectual property and miscellaneous trade fixtures. This new group is planning another BottleRock at Napa Valley Expo May 30-June1.
The bankruptcy court documents, signed by Meyers, provide an explanation from BR Festivals as to what went wrong with the 2013 event.
First, the festival booked too much musical talent at too high a price, according to the documents. Most of the musical talent required 100 percent advance deposits, “which crippled the debtor’s available working capital leading up to the 2013 festival.”
Second, “there was a problem with the financial controls over the food and beverage sales, which were handled by outside contractors, leading to significant underpayment of sums due” to BR Festivals.
This statement refers to an ongoing dispute with Cindy Pawlcyn's restaurant group, CP Cooks LLC, the company that provided food and beverage services. Sean Knight of CP Cooks could not be reached for comment.
Besides “excessive staffing of the event,” Johnson’s $3 million payout on the eve of the event left BR Festivals “unable to pay labor, the city of Napa, and the Napa Expo and other vendors,” court documents assert.
“There were other smaller avoidable transfers as well,” according to the paperwork. Those transfers were not described.
The BR Festivals’ assets listed on the filing are limited. Besides $10,000 in a First Bank checking account, the other asset is a reported $600,000 due from CP Cooks and affiliates for an “unpaid share of food and beverage” revenues.
The bankruptcy attorney representing BR Festivals, John MacConaghy, said that Latitude 38 paid $60,000 for the assets of BR Festivals, which includes the $10,000 currently in a checking account.
A total of $25,000 of that was paid to Napa attorney Matt Eisenberg for bankruptcy and other legal services, $10,000 was paid as a retainer to MacConaghy, and $15,000 was paid to Meyers for his work on the purchase agreement and bankruptcy preparation.
Such payments are standard in any insolvency case, said MacConaghy. People have to be paid to be able to administer the bankruptcy, he said.
“At the end of the day, Gabe Meyers and I are trying to work as fiduciaries for creditors,” said MacConaghy. Meyers will not be paid additional amounts, he added.
The bankruptcy case will also include a proceeding commonly referred to as a “clawback,” MacConaghy said. Attorneys will attempt to recover $3 million paid to Jason Johnson, one of the early investors in BR Festivals. Johnson originally owned 35 percent of the LLC.
The clawback may also encompass a $500,000 “non-refundable deposit” paid by BR Festivals to the Uptown Theatre Property LLC in April 2013. That deposit was not described further.
“I think we have an extremely strong case,” said MacConaghy, who estimated the bankruptcy case will take between six and 18 months.
Neither Vogt nor Meyers could not be reached for comment Thursday. Vogt is no longer a manager of BR Festivals.
“Meyers feels terrible about how this has turned out. He has asked me to do whatever I can get people paid,” MacConaghy said
Approximately 174 debtors are listed in the bankruptcy filing.
Creditors holding the 20 largest unsecured claims include a number of entertainment production companies including: Crews Unlimited, owed $236,952; Delicate Productions, owed $298,247; the International Alliance of Theatrical Employees Local 16, owed $300,000, and National Event Services, owed $162,750.
Other debtors include the city of Napa, owed $106,729; the Franchise Tax Board, owed $236,895; Reichers Spence & Associates, owed $57,000; Napa attorney Matt Eisenberg, owed $80,210; Ghilotti Bros, owed $56,000; Classic Party Rentals, owed $28,000; Emil Meyers Construction, owed $64,000; Holiday Inn Express American Canyon, owed $34,871, and Morimoto Restaurant, owed $15,000.
Because Latitude 38 is a separate entity from BR Festivals, the bankruptcy case “is not expected to have any impact on Latitude 38 Entertainment’s plans to produce a 2014 BottleRock Festival,” according to the documents.
The bankruptcy court filing also notes seven pending lawsuits filed against BR Festivals. They include suits filed by United Site Services, Bauer’s Intelligent Transportation, Landmark Staffing Services, IATSE Local 16, Wine Country Helicopters, Erik Foster, and LaRiviere, Grubman & Payne LLP.
Nathan Trivers, owner of the Up & Under Pub and Grill, Point Richmond, is owed $190,000 for his work at BottleRock 2013.
“It was only a matter of time,” he said of the BR Festivals bankruptcy filing. “I guess getting a slice of something is better than nothing,” he said. “It’d be nice to get any compensation.”
Trivers has been approached by Latitude 38 about possibly working at BottleRock 2014. “I think the new guys are at least trying to move in a positive direction,” he said.
David Graham of Latitude 38 Entertainment declined to comment on the filing except to say:
"As the new producers of BottleRock, our goals are to produce a financially successful event and to deliver an even better experience for the many people who are looking forward to another BottleRock event,” he said.