Michigan’s Double JJ Resort — where the popular Electric Forest music festival is held — is at the center of an issue between SFX Entertainment and AEG Live. The Electric Forest festival started in 2008 when it was called Rothbury. Since the festival’s first inception, the property has been sold several times, but Madison House Presents, which co-produces the festival, has a 20-year lease with Double JJ that has been honored so far. That may not be the case in the future, however.
According to reports, Progressive Resorts LLC bought Double JJ when it was headed for bankruptcy in 2009. Progressive then was forced by the courts to sell the resort to Antler Bar Amusements. The sale agreement, however, let Progressive retain the right to redeem collateral and property by paying $7.6 million in debt.
According to a motion filed on Feb. 6, AEG claims that SFX has been in talks with Progressive Resorts and offered to buy Progressive out and pay the redemption at the end of last year. SFX apparently first tried to buy one of the festival producers, but when that didn’t go through, SFX turned its sights to the property itself. If the deal goes through, it is possible that AEG will be stripped from the festival lease because Progressive may choose to selectively redeem collateral, including land use and the space where the festival is held, but not the lease.
AEG has asked the courts to grant a preliminary injunction and temporary restraining order so that neither the sale order not the lease agreement could be violated by separating the lease from the rest of the collateral. Sales and purchases are not always cut and dried transactions. This case is a perfect example of how understanding the particulars of real estate law can help protect the assets and investments of a company involved in a dispute.
Pollstar, “AEG, SFX: Showdown At Double JJ” Deborah Speer, Feb. 17, 2014