Fyre Festival $137M lawsuit details the Bahamas bungle
NEWYORK— Before the now-infamous Fyre Festival collapsed a few weeks back, the company behind it — maker of a mobile phone app you can use to hire entertainers for your club, concert or party — said it was worth $123.5 million (U.S.), according to a document obtained by Bloomberg News.
Fyre Media Inc. faces a half-dozen lawsuits from less-than-satisfied customers over the disastrous music event in the Bahamas. Now that the fallout is beginning to land in court, details are coming out about the company behind it.
A term sheet dated March 21 described the particulars of a proposed $14.4-million investment in Fyre by Comcast Ventures, the investment arm of media giant Comcast Corp. In exchange for the money, Comcast was to get a 10-per-cent stake, according to the document. An additional $6.2 million from new and existing investors would flow into the tech startup, too, the term sheet stated. But the deal fell through. Though Comcast had considered investing as much as $34.3 million, it backed away entirely during the due diligence process, according to a source.
The Fyre Festival was supposed to be a getaway for moneyed millennials who paid up to five figures for VIP packages. In the litigation that’s followed, attendees accused promoters of not keeping their promises.
As far as the investors were concerned, Comcast dodged a bullet. It dropped out just days before the massive, ultimately doomed attempt at branding. But for those who did invest in Fyre Media, things got a lot more complicated this week.
On Sunday, unidentified investors in Fyre Media were added as defendants to a proposed class action alleging fraud and breach of contract. Filed on behalf of a single concertgoer by Hollywood law firm Geragos & Geragos, the suit (claiming $137.3 million in damages) doesn’t identify the investors by name.
The firm, which contends it will have more than 1,000 additional plaintiffs before long, said it remains unclear whether the investors were also victims of an alleged fraud.
“In the weeks leading up to the festival, when the company already knew the event was doomed for failure, Fyre Media Inc., which was minimally undercapitalized with (initial) investors, was floating a completely inflated and shocking valuation of Fyre Media Inc. between ($123 million and $144 million) to additional” investors, the lawyers said in court papers.