HUKA Defends Itself Against Pemberton Accusations
HUKA Entertainment has released its own lengthy report about the business decisions behind the now-defunct Pemberton Music Festival, defending the role the promoter played in putting on the event and its efforts to stop the bankruptcy filing.
Pemberton Music Festival organizers announced in mid-May that the July 13-16 event in Pemberton, British Columbia, was canceled and automatic ticket refunds would not be issued because the festival was filing for bankruptcy. The news shocked many in the concert industry, notably because of the involvement of established players like HUKA and Ticketfly, and brought about accusations of fraud because of how refunds were handled.
HUKA’s 16-page “Reply to Report on the Trustee’s Preliminary Administration” was posted on the website for bankruptcy trustee Ernst & Young along with a letter dated June 23 from Owen Bird Law Corporation’s Jonathan Williams requesting that the report go on the site so that HUKA would “receive even-handed treatment in the circumstances.”
Mark C. Austin – Pemberton 2014
The scenic area surrounding Mt. Currie is home to Pemberton Music Festival in British Columbia.
The response comes a few weeks after Ernst & Young released its 20-page report on the festival’s bankruptcy, which seemingly accused HUKA of mishandling its role as promoter by misrepresenting the event’s financial projections over the years. The June 6 report also claimed that Pemberton barely dodged cancellation in 2016, saying that HUKA told investors the day prior to the event that it would be “canceled if an additional $3.6 million was not immediately paid to cover cost overruns.”
HUKA’s reply counters Ernst & Young’s report by replying to sections of text a paragraph or two at a time, defending the promoter’s actions from its initial involvement in 2013 up until a vote was made to declare bankruptcy on May 16, 2017.
In opposition to the trustee report that claimed that 111 [sic] B.C. Ltd. director Stephane Lescure voted for bankruptcy as a representative for HUKA, the promoter says, “In actual fact, Stephane Lescure voted as an individual. Moreover, in fact, his vote ran contrary to HUKA’s stated complete opposition to bankruptcy, if it meant failing to honour fan or artist commitments.”
HUKA’s response adds that Lescure was told by the festival investors that his vote didn’t ultimately matter because they already had the majority to pass the motion and that Lescure could have personal liability if he voted against the bankruptcy.
“Most importantly: Huka took extraordinary and successful steps, up to the last moment, to obviate the need for bankruptcy. The day before this vote, Huka: (1) secured a Letter of Intent from a high net worth investor who was prepared to immediately provide funds sufficient to allow PMF 17 to proceed, and (2) provided a proposal to move the location of PMF 17 as a means of reducing cost. These two developments appear to have been entirely ignored by the Canadian Investors.”
Pollstar previously reported that Lescure sent a statement to Pollstar saying, “Just to confirm regarding my vote on PMF, I confirm that ‘I voted for myself.’”
As far as the near-cancellation of the 2016 festival, HUKA said “This is false innuendo, arising mainly from omission.” The promoter acknowledged that while it is correct that additional funds were required to cover festival costs, “all involved parties, including the Canadian Investors were aware these funds would be required for a long time prior to the date here. … At no point after guests had arrived at the festival was cancellation ever discussed.”
HUKA also had a strong objection to the trustee report’s claim that “subsequent to the 2016 PMF, despite the significant losses incurred for the 2016 PMF, and without the knowledge of the Canadian Investors, HUKA continued to draw its monthly producer fees.”
The response states: “This is beyond misleading. This allegation is completely untrue and outrageous. Huka insists this allegation be publicly withdrawn and explicitly corrected. Huka, of course, is unable to disprove a non-specific allegation framed in the negative, but calls upon the Trustee to take positive steps to verify, by any proof, either of the following facts; both of which are false: (1) Huka received monies of which the Canadian Investors were unaware. (2) Huka received monies to which they were not entitled.”
The producer also countered the trustee’s claim that HUKA received $3.45M USD in producer fees, while the Canadian investors received no funds in return on their investment.
“In fact, Huka never received any distribution from PMF LP, other than payment for its services. Huka did receive fees, which funds were necessary to pay the wages of more than two dozen full-time employees who worked year-round to produce PMF. On the other hand, the Canadian Investors did receive from PMF rent revenue for land, as well as other fees. This is in addition to benefits received by the Canadian Investors in the form of tax credits of considerable value.”
HUKA also pointed out that the company often “worked for months at a time without pay, in an effort to make the events viable.”
One more item of note – in regards to the trustee report’s claim that the festival was in “worst financial shape than HUKA had initially represented to the Canadian investors,” the promoter counters that, “The Canadian investors had complete and unfettered online access to all financial materials for years. They also received regular and detailed reports.”
The 2017 festival would have marked the fifth edition of Pemberton Music Festival, after debuting in 2008 then returning under different ownership in 2014 with HUKA as the producer. The lineup was supposed to feature Chance The Rapper, Muse, A Tribe Called Quest, Major Lazer, Haim, and Run The Jewels.
A representative for HUKA declined Pollstar’s request to comment any further.