NEW YORK – With investors still seeking clarity on what happened to more than a half a million dollars they provided to Billy McFarland’s Fyre Media Inc. to fund the inaugural Fyre Festival in the Bahamas this year, a federal judge has ordered that Fyre Festival LLC file for chapter seven bankruptcy, according to reports.
Fyre Festival LLC is a subsidiary of Fyre Media Inc., the company McFarland established to promote both the festival and a talent booking app. At presstime, Fyre Media itself had not been ordered to for bankruptcy, but if, as expected, a trustee is appointed to look into business records at Fyre Festival LLC, that would be one of the possible outcomes.
McFarland was arrested June 30 on charges of wire fraud based on allegations that he presented falsified documents to investors, but was released on $300,000 bail. Reportedly in talks with federal prosecutors on a plea deal, his case was granted a 30-day extension on Aug. 2. He is said to be facing charges with a maximum penalty of 20 years in prison.
The decision by U.S. Bankruptcy Court judge Martin Glenn to order Fyre Festival LLC into chapter seven was prompted by lawyer Robert Knuts, who represents lenders investing a total of $530,000 into the failed festival. While not optimistic on recovering the full amount, “at least we’ll know where it went,” he told reporters.
