Case 16-10238-MFW Doc 1386 Filed 01/03/17 Page 1 of 8 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: SFX ENTERTAINMENT, INC., et al., 1 Reorganized Debtors. Chapter 11 Case No. 16-10238 (MFW (Jointly Administered REQUEST OF M&M MANAGEMENT BVBA AND ID&T BVBA FOR ALLOWANCE AND PAYMENT OF ADMINISTRATIVE EXPENSE CLAIM 2 M&M Management BVBA ( M&M and ID&T BVBA (collectively with its affiliate, WEAREONE.WORLD BVBA, ID&T, by and through its undersigned counsel, hereby request allowance and payment of an administrative expense (the Request in the amount of not less than $5,545,900 pursuant to sections 503(b and 507(a of chapter 11, title 11, United States Code (the Bankruptcy Code and in support thereof respectfully state as follows: 1 2 The Reorganized Debtors in these chapter 11 cases, along with the last four (4 digits of each Debtor s federal tax identification number, if applicable, are: 430R Acquisition LLC (7350; Beatport, LLC (1024; Core Productions LLC (3613; EZ Festivals, LLC (2693; Flavorus, Inc. (7119; ID&T/SFX Mysteryland LLC (6459; ID&T/SFX North America LLC (5154; ID&T/SFX Q-Dance LLC (6298; ID&T/SFX Sensation LLC (6460; ID&T/SFX TomorrowWorld LLC (7238; LETMA Acquisition LLC (0452; Made Event, LLC (1127; Michigan JJ Holdings LLC (n/a; SFX Acquisition, LLC (1063; SFX Brazil LLC (0047; SFX Canada Inc. (7070; SFX Development LLC (2102; SFX EDM Holdings Corporation (2460; SFX Entertainment, Inc. (0047; SFX Entertainment International, Inc. (2987; SFX Entertainment International II, Inc. (1998; SFX Intermediate Holdco II LLC (5954; SFX Managing Member Inc. (2428; SFX Marketing LLC (7734; SFX Platform & Sponsorship LLC (9234; SFX Technology Services, Inc. (0402; SFX/AB Live Event Canada, Inc. (6422; SFX/AB Live Event Intermediate Holdco LLC (8004; SFX/AB Live Event LLC (9703; SFX-94 LLC (5884; SFX-Disco Intermediate Holdco LLC (5441; SFX-Disco Operating LLC (5441; SFXE IP LLC (0047; SFX-EMC, Inc. (7765; SFX-Hudson LLC (0047; SFX-IDT N.A. Holding II LLC (4860; SFX-LIC Operating LLC (0950; SFX-IDT N.A. Holding LLC (2428; SFX- Nightlife Operating LLC (4673; SFX-Perryscope LLC (4724; SFX-React Operating LLC (0584; Spring Awakening, LLC (6390; SFXE Netherlands Holdings Coöperatief U.A. (6812; SFXE Netherlands Holdings B.V. (6898. The Debtors business address is 902 Broadway, 15 th Floor, New York, NY 10010. This Request is conditional only and is not intended, nor should it be construed, as ID&T s or M&M s consent to jurisdiction in the United States of America, the United States Bankruptcy Court for the District of Delaware, or as a waiver of ID&T s and M&M s right to compel arbitration.
Case 16-10238-MFW Doc 1386 Filed 01/03/17 Page 2 of 8 BACKGROUND 1. M&M and ID&T founded and organize the Tomorrowland music festival. Tomorrowland, first run in 2005, is one of the biggest electronic music festivals in the world, taking place in Boom, Belgium. In 2016, more than 180,000 tickets were sold for the festival. 2. In 2013, M&M and SFX organized the first TomorrowWorld music festival in the United States, based on the Tomorrowland festival held in other countries. The TomorrowWorld festival, much like the earlier festivals, was an immediate success. In the inaugural event in 2013, more than 140,000 people attended the TomorrowWorld music festival in Chattahoochee Hills, Georgia. 3. The TomorrowWorld music festival is the most successful festival in the Debtors portfolio and requires the participation of M&M for it to take place. M&M owns the rights to the brands, trademarks, and other intellectual property relating to TomorrowWorld and licenses their use to SFX and others for the TomorrowWorld festival. 4. M&M and ID&T also founded and organize the Tomorrowland festival in Brazil. In 2014, the festival sold out one day after it was announced, with more than 180,000 tickets being sold. 5. On or around June 24, 2014, M&M and SFX entered into a binding term sheet (the Binding Term Sheet, that set forth a series of transactions that govern the parties relationship in connection with organizing the Tomorrowland and TomorrowWorld festivals. These transactions include, but are not limited to, (a the transfer of intellectual property by each party to a new entity to hold the brands, trade names, designs and other intellectual property relating to the festivals, (b the formation of a new entity to be exclusively responsible for the creative and strategic direction of the festivals, (c the formation of a new entity whose sole purpose will be to develop ancillary business related to the festivals, (d a master ticket 2
Case 16-10238-MFW Doc 1386 Filed 01/03/17 Page 3 of 8 agreement, and (e a share purchase agreement. The Binding Term Sheet contains various rights of first refusal for M&M with respect to, among other things, the intellectual property related to the festivals. 6. The parties have operated under the Binding Term Sheet since its execution and the Binding Term Sheet provides that if the Parties do not execute [further definitive documents] then the terms set forth herein shall be binding on the Parties. Binding Term Sheet 3 at p. 17. The Binding Term Sheet provides for various payment and performance obligations of the parties, including obligations that arose after the petition date. 7. The Binding Term Sheet is governed by Belgian law and any and all disputes arising out of or in connection with the Binding Term Sheet are subject to the Rules of Arbitration of the International Chamber of Commerce with arbitration to occur in Paris, France. 8. M&M and ID&T have been operating in accordance with the Binding Term Sheet and agreements entered into in furtherance of the Binding Term Sheet since the Debtors filed voluntary petitions for protection under chapter 11 of the Bankruptcy Code on February 1, 2016. 9. On December 2, 2016 (the Effective Date, the Debtors Fifth Amended Joint Plan of Reorganization of SFX Entertainment, Inc., et al. Under Chapter 11 of the Bankruptcy Code (as Modified (the Plan became effective in accordance with its terms and the terms of the confirmation order (D.I. 1293 entered by the Court on November 15, 2016. 4 3 4 Sealed copies of the Binding Term Sheet and joint venture agreement are attached to the objection found at D.I. 155 as Exhibit A and Exhibit B, respectively. Section 9.03 of the Plan has specific provisions governing all claims of M&M and ID&T against the Debtors arising under the M&M/ID&T Agreements (as defined in the Plan occurring before Effective Date. Section 9.03 provides for a ride through of any and all rights, property, intellectual property, equity interests, other interests, or defenses of M&M or ID&T existing at any time (including without limitation, rights, property, intellectual 3
Case 16-10238-MFW Doc 1386 Filed 01/03/17 Page 4 of 8 10. Pursuant to the Plan, parties with claims against the Debtors arising on or after February 1, 2016 through and including December 2, 2016 must file a request for Administrative Claims with this Court on or prior to January 3, 2016, as set forth in the notice filed by the Debtors (D.I. 1342 (the Notice. 11. Subsequent to the Effective Date, one of the Debtors affiliates filed an action against ID&T in Antwerpen, Belgium, relating to the Binding Term Sheet. This proceeding, which is summary in nature, is in its initial stages. JURISDICTION 12. This Court has jurisdiction to consider this request pursuant to 28 U.S.C. 157 and 1334. The statutory predicates for the relief sought herein are sections 503(b and 507(a of the Bankruptcy Code. This is a core proceeding pursuant to 28 U.S.C. 157. Venue in this Court is proper pursuant to 28 U.S.C. 1408 and 1409. RELIEF REQUESTED 13. ID&T and M&M request allowance and payment of an administrative expense in the amount of $5,545,900 for their claims and expenses incurred during the pendency of the Debtors chapter 11 cases as set forth on the attached Schedule 1 and as further described below. property, equity interests, other interests, or defenses arising under the Binding Term Sheet, dated June 20, 2014, the Joint Venture Agreement between M&M and ID&T International B.V., dated September 9, 2004, or other agreements between any of the Debtors, on the one hand, and M&M and/or ID&T, on the other hand (collectively, the M&M/ID&T Agreements. Plan 9.03. This ride through language specifically provides that the aforementioned rights are preserved and unaffected by the Plan, the Disclosure Statement, any other order of the Bankruptcy Court, or any provision of the Bankruptcy Code. Id. Thus, ID&T and M&M file this Request solely out of an abundance of caution and fully reserve and do not waive any and all of their rights, interests and/or claims. 4
Case 16-10238-MFW Doc 1386 Filed 01/03/17 Page 5 of 8 14. The first category of actual and necessary expenses listed in the attached schedule relate to the TomorrowWorld 2016 festival that was to have been held in 2016 but was cancelled due to breaches of the Binding Term Sheet and other M&M/ID&T Agreements by the Debtors and their affiliates. The rental fees and the supplier obligations represent actual amounts incurred by M&M and/or ID&T in preparing for the TomorrowWorld 2016 festival, which arose on and after February 1, 2016. Additionally, this category of expenses includes the Affiliation Fee due to M&M under the Binding Term Sheet. Binding Term Sheet at 14. 15. The second category of actual and necessary expenses listed in the attached schedule relate to the Tomorrowland Brazil 2016 festival that was held in April 2016. Upon information and belief, the Debtors directed their affiliate, ID&T Brazil, to cease payments to ID&T of amounts owing under the Binding Term Sheet, including the Affiliation Fee due to M&M. The listed supplier obligations represent actual amounts incurred by ID&T in organizing and running the Tomorrowland Brazil 2016 festival, which arose on and after February 1, 2016. 16. The third category of actual and necessary expenses listed in the attached schedule relate to the expenses incurred in the organization of future TomorrowWorld and Tomorrowland Brazil festivals, including costs related to festival stages, decorations, lighting, storage, website costs, and containers. This funding requirement is due to M&M under the Binding Term Sheet and became due after February 1, 2016. 17. The final category of actual and necessary expenses listed in the attached schedule relate to the Acknowledgment and Agreement dated June 7, 2016, between ID&T, Diageo North Americas, Inc., and SFX Entertainment Inc. (the Acknowledgment and Agreement. Pursuant to the Acknowledgment and Agreement, SFX Entertainment, Inc. designated ID&T as the designee to receive the TL Belgium Sponsorship Fee (as defined in the 5
Case 16-10238-MFW Doc 1386 Filed 01/03/17 Page 6 of 8 Acknowledgment and Agreement in connection with the 2016 Tomorrowland Festival in Belgium. As of the time of the filing of this Request, ID&T has not received the full amount of the TL Belgium Sponsorship Fee. ID&T includes this amount in this Request to preserve its rights under the Acknowledgement and Agreement to, inter alia, obtain the full amount of the TL Belgium Sponsorship Fee. RESERVATION OF RIGHTS 18. This Request is conditional only and is not intended, nor should it be construed, as ID&T s or M&M s consent to jurisdiction in the United States of America, the United States Bankruptcy Court for the District of Delaware, or as a waiver of ID&T s and M&M s right to compel arbitration, judicial foreclosure, or a trial by jury in any action or proceeding. Additionally, this Request is filed with (a full reservation of ID&T s and M&M s rights and remedies, including without limitation: (i the right to assert additional, modified, supplementary and/or amended requests for administrative expenses based on, inter alia, events, information and/or documents obtained from the Debtors or others through discovery or otherwise, and (ii the right to assert any equitable remedy; and (b full reservation of, inter alia: (i ID&T s and M&M s rights, interests and/or claims against any party other than the Debtors and (ii ID&T s and M&M s rights, interests and/or claims in any property, including property of the estate(s and property that is not property of one or more of the Debtors estates. Without in any way limiting the foregoing, ID&T and M&M reserve their right to assert any claim, right or interest they may have against the Debtors or against any other party or property other than that of the Debtors and their estates. NOTICE 19. ID&T and M&M have served a copy of this Request on (a counsel to the Reorganized Debtors (as such term is used in the Notice, (b the Office of the United States 6
Case 16-10238-MFW Doc 1386 Filed 01/03/17 Page 7 of 8 Trustee, and (c counsel to the DIP Lenders (as such term is used in the Notice. ID&T and M&M submit that such notice is sufficient and no other or further notice need be provided. WHEREFORE, ID&T and M&M respectfully requests that the Court (i enter the proposed order attached hereto as Exhibit A granting ID&T and M&M an administrative expense in the amount of not less than $5,545,900; (ii direct immediate payment of such claim; (iii reserve and preserve ID&T s and M&M s right to seek payment of additional administrative expenses should they arise; and (iv grant such grant such other relief as the Court finds just and proper. Dated: January 3, 2017 Wilmington, DE MORRIS, NICHOLS, ARSHT & TUNNELL LLP /s/ Curtis S. Miller Curtis S. Miller (#4583 Daniel B. Butz (#4227 1201 North Market Street P.O. Box 1347 Wilmington, DE 19899 Telephone: (302 658-9200 Facsimile: (302 658-3989 10672070.2 Counsel to M&M Management BVBA and ID&T BVBA 7
Case 16-10238-MFW Doc 1386 Filed 01/03/17 Page 8 of 8 SCHEDULE 1 Claims for Administrative Expenses Festival: TomorrowWorld 2016 Debtor Party (and any Affiliates: ID&T/SFX TomorrowWorld LLC Description: Affiliation fee under the Binding Term Sheet for TomorrowWorld 2016 Amount in Amount in EUR: USD: 5 700,000 785,526 Stage rentals for TomorrowWorld 2016 1,018,012 1,142,393 Contractual obligations (G3 for TomorrowWorld 2016 266,500 299,061 Tomorrowland Brazil 2016 ID&T Brazil & SFX Entertainment Inc. Outstanding amounts for Tomorrowland Brazil 2016 (Eurospendings that remain unpaid 783,685 893,495 Contractual obligations to other suppliers for Tomorrowland Brazil 2016 that remain unpaid 107,816 122,923 Funding Requirement Due in 2016 for Festivals SFX Entertainment Inc. Contractual obligations for funding under the Binding Term Sheet arising after February 1, 2016 1,904,725 2,127,502 Tomorrowland Belgium 2016 SFX Entertainment Inc. Remaining amounts owing under Acknowledgment and Agreement pursuant to Event Sponsorship Agreement with Diageo N/A 175,000 Total amount claimed 5,545,900 5 Represents amounts converted to USD at the applicable due date.
Case 16-10238-MFW Doc 1386-1 Filed 01/03/17 Page 1 of 3 EXHIBIT A
Case 16-10238-MFW Doc 1386-1 Filed 01/03/17 Page 2 of 3 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: SFX ENTERTAINMENT, INC., et al., 1 Reorganized Debtors. Chapter 11 Case No. 16-10238 (MFW (Jointly Administered Re: D.I. ORDER APPROVING REQUEST OF M&M MANAGEMENT BVBA AND ID&T BVBA FOR ALLOWANCE AND PAYMENT OF ADMINISTRATIVE EXPENSE CLAIM Upon the Request of M&M Management BVBA ( M&M and ID&T BVBA ( ID&T for Allowance and Payment of Administrative Expense Claim (the Request 2 ; and this Court having determined that proper and adequate notice has been given and that no other or further notice is necessary; and after due deliberation thereon; and good and sufficient cause appearing therefor; 1 The Reorganized Debtors in these chapter 11 cases, along with the last four (4 digits of each Debtor s federal tax identification number, if applicable, are: 430R Acquisition LLC (7350; Beatport, LLC (1024; Core Productions LLC (3613; EZ Festivals, LLC (2693; Flavorus, Inc. (7119; ID&T/SFX Mysteryland LLC (6459; ID&T/SFX North America LLC (5154; ID&T/SFX Q-Dance LLC (6298; ID&T/SFX Sensation LLC (6460; ID&T/SFX TomorrowWorld LLC (7238; LETMA Acquisition LLC (0452; Made Event, LLC (1127; Michigan JJ Holdings LLC (n/a; SFX Acquisition, LLC (1063; SFX Brazil LLC (0047; SFX Canada Inc. (7070; SFX Development LLC (2102; SFX EDM Holdings Corporation (2460; SFX Entertainment, Inc. (0047; SFX Entertainment International, Inc. (2987; SFX Entertainment International II, Inc. (1998; SFX Intermediate Holdco II LLC (5954; SFX Managing Member Inc. (2428; SFX Marketing LLC (7734; SFX Platform & Sponsorship LLC (9234; SFX Technology Services, Inc. (0402; SFX/AB Live Event Canada, Inc. (6422; SFX/AB Live Event Intermediate Holdco LLC (8004; SFX/AB Live Event LLC (9703; SFX-94 LLC (5884; SFX-Disco Intermediate Holdco LLC (5441; SFX-Disco Operating LLC (5441; SFXE IP LLC (0047; SFX-EMC, Inc. (7765; SFX-Hudson LLC (0047; SFX-IDT N.A. Holding II LLC (4860; SFX-LIC Operating LLC (0950; SFX-IDT N.A. Holding LLC (2428; SFX- Nightlife Operating LLC (4673; SFX-Perryscope LLC (4724; SFX-React Operating LLC (0584; Spring Awakening, LLC (6390; SFXE Netherlands Holdings Coöperatief U.A. (6812; SFXE Netherlands Holdings B.V. (6898. The Debtors business address is 902 Broadway, 15 th Floor, New York, NY 10010. 2 Capitalized terms not defined herein are defined in the Request.
Case 16-10238-MFW Doc 1386-1 Filed 01/03/17 Page 3 of 3 IT IS HEREBY ORDERED THAT: (a (b The Request is GRANTED. ID&T and M&M are allowed an administrative expense claim for actual and necessary expenses in the amount of $5,545,900. (c The Debtors shall make immediate payment to ID&T and M&M in the amount of $5,545,900. (d Nothing in this order shall preclude ID&T and M&M from seeking additional or future payment of additional administrative expenses to the extent they arise. (e This Order shall be effective immediately upon entry. Dated: Wilmington, Delaware THE HONORABLE MARY F. WALRATH UNITED STATES BANKRUPTCY JUDGE 10672070.2 2
Case 16-10238-MFW Doc 1386-2 Filed 01/03/17 Page 1 of 1 CERTIFICATE OF SERVICE I, Curtis S. Miller, certify that I am not less than 18 years of age, and that service of the foregoing Request for M&M Management BVBA and ID&T BVBA for Allowance and Payment of Administrative Expense Claim was caused to be made on December 30, 2016, in the manner indicated upon the entities identified below. Dated: January 3, 2017 /s/ Curtis S. Miller Wilmington, DE Curtis S. Miller (No. 4583 Via Hand Delivery Dennis Meloro Greenberg Traurig 1007 Orange St. Wilmington, DE 19801 Via First Class Mail Nathan A. Hayes Leo Muchnik Greenberg Traurig 200 Park Ave. New York, NY 10166 Kristopher Hansen Jonathan Canfield Stroock & Stroock & Lavan LLP 190 Maiden Lane New York, NY 10038 10675024.1