The company behind the disastrous Fyre Festival — the heavily hyped luxury concert in the Bahamas starring Blink-182, Migos and Disclosure that collapsed on in a mess of disorganization on April 29, before it had even started — will have its first day in a New York state court Thursday when investor Oleg Itkin is scheduled for a hearing for an injunction to freeze the company’s assets, books and records.
Itkin’s law firm, Caitlin Robin & Associates, on Friday filed an order to show cause and a motion for summary judgment in lieu of a complaint, and got a judge to quickly sign-off on the hearing date. The Itkin suit becomes the first entity — federal or state — to force Fyre Media principal William McFarland to publicly account for his actions. McFarland, who was served at his residence over the weekend, is not expected to personally appear, and instead is likely to be represented by an attorney.
The complaint alleges Itkin loaned Fyre $700,000 in three promissory notes, the last of which was personally guaranteed by McFarland in May. The injunction seeks to freeze assets in various bank accounts and an account at Scott Trade.
“We made an emergency application based on the high likelihood that the corporate assets of Fyre Media and personal assets of Billy McFarland would be squandered or dissipated,” said Caitlin Robin attorney Michael Quinn, noting that this is the first step in a process of determining the nature of scope of events related to McFarland and Fyre Media.
Allegations in Ikin’s suit include that the defendant was loaned the $700,000 on the belief of representations made in writing that Fyre Media owned land worth $8.4 million of “Black Point Exuma land,” had assets of $31 million, and more than $3 million cash in two bank accounts.
The suit claims that McFarland represented in December that his Fyre Media — encompassing the Fyre Festival and talent-booking software known as the Fyre App — had total revenue of $21.6 million and income of $1.4 million.
These are claims that other litigants have publicly challenged, and with at least nine other lawsuits — including six class actions — against Fyre and McFarland, there is likely to be a scramble for whatever assets can be captured. Many of the investor litigants are alleging that the “robust” outlook McFarland presented for Fyre’s capitalization was to some extent fabricated.
The suit further alleges that McFarland claimed the artist Drake booked a $1.5 million performance through the Fyre App (he did not), and that the festival garnered more than $77 million worth of social media promotion.
The hearing is set for Thursday a.m. 9:30 in the Commercial Divison of the New York State Court at 60 Centre Street. Attorneys for Fyre and McFarland did not respond to inquiries at press time.
McFarland said in an interview shortly after the festival was cancelled that his staff was “ambitious” and “overwhelmed,” blamed many of the company’s problems on poor infrastructure, and promised to hold a free festival for disappointed concertgoers next year.