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SFX Hints That It Might Go After Sillerman
Bob Sillerman will not retain his chairmanship of SFX or any of his preferred stock when the company emerges from bankruptcy later this fall, and company officials have indicated plans to potentially pursue civil and criminal charges against the eccentric CEO.
Yesterday, SFX officials released a revised Restructuring Support Agreement for SFX, handing control over to the banks that lent SFX money in the months leading up to its February bankruptcy. Instead of staying on as chairman as he originally hoped, Sillerman’s 40 percent stake in the company’s stock will be wiped out, along with other shareholders who invested $300 million in SFX.
Sillerman had hoped to serve as the chairman of SFX, but the lenders who financed the company during bankruptcy – German-based Allianz SE and Axar Capital Management – will instead take control and attempt to emerge from bankruptcy under the leadership of Randy Phillips, the former CEO of AEG Live. U.S. Bankruptcy Judge Mary Walrath will be asked to approve the plan Aug. 30.
As part of the filing, SFX officials said they were looking into Sillerman and other board members for “general breaches of fiduciary duty” relating to “insider transactions and funding issues,” as well as several attempts by Sillerman to take the company private that never materialized.
Company officials might void “amounts reimbursed to Sillerman” and other warrants issued to the former CEO, whom they say may have engaged in “fraudulent transfer claims under federal and state law.”
SFX also chose to exclude Sillerman, as well as SFX General Counsel Howard Tytel and vice chairman Mitch Slater from a blanket release of all debtors, shareholders and former employees against future claims of damages, paving the way for a lawsuit against the men.
If SFX does pursue claims against Sillerman, several insiders at the company say they expect him to settle out of court, although it could be months before any claims are brought forward.
Sillerman has already moved on to his next venture – DraftDay, a daily fantasy sports site traded on the NASDAQ that’s similar to Draft Kings and Fan Duel. Earlier this year, DraftDay acquired media site Rant Sports and entertainment news portal Wet Paint. With his roll up of the EDM space now bust, Sillerman is going into the media business and seeks to consolidate fantasy sports and media into a single platform for large advertisers.