SFX Entertainment filed with the U.S. Bankruptcy Court a motion for an order to enter into a resignation and transition agreement with Robert F. X. Sillerman.
The motion explains, “The RSA was structured to require Mr. Sillerman’s resignation by April 1, 2016 because the Debtors and the noteholder parties to the RSA believed, inter alia, (i) the Debtors retaining Mr. Sillerman as Chief Executive Officer through the end of March 2016 would allow the Debtors to stabilize their business in the early days of these Chapter 11 Cases and reduce the risk of additional turmoil; and (ii) Mr. Sillerman’s resignation by April 1, 2016 would be beneficial because it would allow the Debtors to prepare for the future and attract a management team that could successfully lead the Debtors after their emergence from bankruptcy. In order to comply with their obligations under the RSA, the Debtors sought Mr. Sillerman’s resignation by the end of March 2016. The RSA itself did not spell out the terms and conditions of the resignation. Mr. Sillerman indicated to the Debtors that he would agree to resign as required by the RSA in exchange for certain limited benefits.”
The motion continues, “Aside from entering into the Resignation Agreement, the Debtors’ other options were to (i) leave Mr. Sillerman in as Chief Executive Officer, which would violate the RSA, would not have been supported by the Committee, and would not, in the Debtors’ business judgment, have represented a productive step in moving their restructuring forward; or (ii) remove Mr. Sillerman from office, which also would not comply with the terms of the RSA, and would have resulted in a public dispute with Mr. Sillerman. The Debtors believed that the optics and practical effect of such dispute would have been detrimental to the Debtors’ business and would have resulted in the expenditure of significant time and money by the Debtors. Accordingly, the Debtors determined that entry into the Resignation Agreement was the best approach….The Resignation Agreement further avoids the cost of litigation attendant to terminating Mr. Sillerman’s employment under other than amicable circumstances, which would far outweigh the costs associated with the Resignation Agreement.”
The Court scheduled a June 22, 2016 hearing to consider the motion, with objections due by June 15, 2016. Read more SFX bankruptcy news.
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