The Pemberton Music Festival, LP (PMF) has declared bankruptcy.
The Vancouver office of accountancy firm Ernst & Young has been named trustee and confirmed to Pique that the four-day festival, due to take place from July 13 to 16, has ended in its fourth year.
According to a factsheet supplied by Ernst & Young, revenue for the 2017 festival to date was $8,225,000 and budgeted expenses were $22,000,000. Both amounts are in Canadian dollars.
Information supplied by Ernst & Young stated:
“The Trustee will distribute proceeds to creditors on a priority basis based on a scheme of distribution specified in the Bankruptcy and Insolvency Act of Canada.”
The firm stated that the festival owes its secured creditors approximately US$2.5 million. It is likely that secured creditors will be paid first as a priority.
But, according to documents obtained by Postmedia, the businesses behind the cancelled event may actually owe ticketholders and other creditors more than $16.7 million.
The Vancouver Sun reported that Pemberton Music Festival Limited Partnership, which filed for bankruptcy Thursday, has $6.6 million in assets and $10.1 million in deficits, according to a statement of affairs provided to Postmedia by the Office of the Superintendent of Bankruptcy Canada..
The debtors' liabilities total $16.74 million, which includes more than $8.2 million owed to ticketholders for this year's event.
The Ernst & Young info sheet gave some insights into the struggles festival organizers have run into:
“The Pemberton Music Festival has been significantly impacted since 2015 by a weakening Canadian dollar relative to the U.S. dollar as many of its entertainment costs are denominated in $US dollars. In addition, the Pemberton Music Festival experienced increasing difficulty in sourcing talent for the 2017 festival due to a limited number of artists touring in 2017.”
In an interview with Pique on May 1, Huka Entertainment chairman and chief experience officer A.J. Niland spoke of the financial risks associated with the festival.
When asked if the high U.S. dollar had an impact on the festival, especially as Pemberton is Huka's only Canadian festival, Niland said:
"It does, indeed, have an impact. It always is a concern. We try to adjust for it in other ways, but it definitely has an impact on the festival because most artists are paid in U.S. dollars, and that has a big impact on the budget.
"It’s a bit of a guessing game, you know. You follow it the best you can, you try to mitigate it as best you can, but the dollar does what it wants to do and we have to live with the consequences."
Huka Entertainment made a brief statement following the announcement on Thursday afternoon, May 18:
“For the past four years Huka Entertainment has worked to create a one-of-a-kind experience in the most beautiful place on earth. We are heartbroken to see the 2017 Pemberton Music Festival cancelled.
“As a contract producer, Huka did not make the decision to cancel the Festival. That decision was made by the Pemberton Music Festival, LP. We are extremely disappointed for our fans, artists and all of our partners who have supported the festival over the years.”
Ernst & Young added the following for ticket holders:
“Unfortunately, there are no automatic refunds from PMF. As PMF is now in bankruptcy, it has no ability to provide refunds for tickets purchased. However ticketholders may file a proof-of-claim form as an unsecured creditor with EYI in accordance with the claims process.
"Proof of claim forms will be mailed to known PMF creditors in due course and made available on the Trustee’s website at: www.ey.com/ca/pmf (the link is going live Thursday evening, May 18). A determination of recovery, if any, on the claims of ticket holders from the estate will not be known for several weeks. The Trustee will provide an update to creditors in due course.
“Also, refunds may be available to ticketholders from third parties if tickets were purchased using a credit card. As each bank and credit card issuer have their own specific policies, ticketholders are to contact their bank or credit card issuer directly to determine whether a refund can be obtained.
“In due course, the Trustee will provide further details concerning contact information for the various credit cards and financial institutions on its website.”
The last postings on PMF's social media was a Twitter post the day before the announcement, on May 17, that read “52 days til we’re back here blowin’ bubbles at basscamp” and an Instagram post with the message “It’s just not the same here without you guys. Can’t wait for you to come back home in less than 8 weeks!! #PembyIsMagic.”
The 2017 headliners announced on April 27 included Chance the Rapper, British rockers Muse, and hip-hop legends A Tribe Called Quest.
The festival’s website was still selling tickets after the announcement was made, as of 3:50 p.m. on Thursday.
After learning of the news, Pemberton Mayor Mike Richman said in a release that the annual event has had "a tremendous impact" on the community.
"The festival has provided great exposure for Pemberton, contributed to our local economy and has generously supported our community through the Pemberton Music Festival Community Fund,” he added. “Staff and Council worked hard to facilitate this world-class event to ensure the community was able to leverage this unique opportunity. We’d like to thank the Pemberton Music Festival for investing in our community and hope we will see them back in the future.”
Follow the story on www.piquenewsmagazine.com or pick up the next issue of Pique on Thursday, May 25.
This breaking news item has been updated as more information was made available.