Reference no: EM131639909
Summarize the below article in two paragraphs:
A judge has put the company that promoted Fyre Festival in bankruptcy following pressure from disgruntled lenders who hope federal court will in time reveal what happened to money they sunk into the doomed music festival and whether they can get any of it back.
The bankruptcy comes months after Fyre Festival, hyped as a "transformative" cultural event held in the Bahamas with Instagram videos of models riding on boats and jet skis, was abruptly called off. Concertgoers posted photos that went viral on social media showing an unfinished festival ground and bad food. Lawsuits from lenders, ticket holders and vendors followed soon after against those who promoted the event, including William "Billy" McFarland and rapper Ja Rule.
Three lenders who loaned $530,000 sought to force Fyre Festival LLC into chapter 7 bankruptcy in July, days after Mr. McFarland was arrested and charged with fraud. He was released on bail. On Tuesday, U.S. Bankruptcy Judge Martin Glenn in New York ordered the company to prepare documents listing whom it owes money to.
"If the money was burned up in the Bahamas we're not going to be able to recover it but at least we'll know where it went," Robert Knuts, a Sher Tremonte LLP lawyer who is representing the lenders, said Wednesday. Mr. Knuts said these lenders are part of a larger group of more than 20 individuals who loaned the festival more than $4 million.
A trustee is now expected to take control of Fyre Festival. The trustee would have the power to examine business records and, potentially, recover money for creditors. A trustee could also seek to force parent company Fyre Media Inc. into bankruptcy as well, lawyers said. The company didn't contest the investors' bankruptcy petition, Mr. Knuts said.
Karen Chesley, a Boies, Schiller & Flexner LLP lawyer representing Mr. McFarland in his criminal case, said in an email last week that Fyre Festival has not formally retained legal counsel. Ms. Chesley said Wednesday she had nothing new to share about the bankruptcy.
Stacey Richman, a lawyer representing Ja Rule, told The Wall Street Journal last week that if her client "had his druthers," creditors would already have been repaid. Ms. Richman said Jeffrey Atkins, the performer's real name, didn't receive any money as part of his involvement with the event.
"He didn't get a dime," Ms. Richman said.
Fyre Media was originally in the business of developing a digital app to book artists and entertainers for concerts and events. In late 2016, Mr. McFarland established a subsidiary, Fyre Festival LLC, to support the music festival, according to court documents. Prosecutors allege Mr. McFarland misrepresented Fyre Media's revenue and his own finances to investors. He faces up to 20 years in prison if convicted.
The festival was to be held over two weekends in April and May and sold ticket packages that ranged between $1,200 and $100,000, according to the lawsuits. Fyre Festival was supposed to feature performances by Major Lazer, Migos and other artists, but the promise of a music festival in paradise with "luxurious" accommodations didn't materialize. The bankruptcy halts lawsuits that have been brought against Fyre Festival LLC specifically.
Earlier this month another lawyer, Michael Levine, who had been representing Mr. McFarland in a civil lawsuit, sought to withdraw as counsel in that case, which was brought by a different lender. In an August court filing, Mr. Levine said Mr. McFarland has not paid fees or executed a retainer agreement for his services. The Manhattan penthouse Mr. McFarland was renting has also been put on the market.