After the cancellation of the Bloc festival on Friday night, Baselogic have announced that they have gone into voluntary administration. Here we explain that means.
Bloc 2012 was a disaster, for organisers and fans alike. Music, party and travel plans were ruined for tens of thousands of people who had come from all over the world for the festival. These events have now taken an even darker turn with the organisers filing for bankruptcy.
Why have Baselogic entered administration?
We cannot say for sure why they have, but the announcement may not have come as a surprise for many of you. Festivals make the majority of their revenue from ticket sales and subletting space to food and drink providers. As the tickets and space can only be sold once the land, the festival and key acts have been confirmed, there are a lot of initial costs in setting up a festival before the money starts to flow in.
This means that, particularly in the case of a growing festival, the organisers need to borrow money upfront to pay for the festival and then repay the debt once tickets sales and subletting the space really begins to pay off. With Bloc, this is a serious issue as the both the ticket holders and the companies who bought the space are entitled to a full refund from the organisers, which potentially leaves Baselogic unable to pay back its creditors.In such a situation companies often enter administration in order to pay off their debts.
What does voluntary administration entail?
Administration, whether voluntary or not, is a process whereby a third party is brought in to:
1) Conduct an audit of Baselogic’s finances to put together an accurate picture of how much money Baselogic currently has (in cash and in assets) and how much Baselogic owes.
2) Negotiate between Baselogic and creditors in order to structure repayments for all those who are owed.
What does this mean for ticket holders?
Ticket holders are in the same pot as those who rented the space, those who loaned the initial cash for the upfront costs (likely to be one or more banks), and all others who are owed money. When the administrators have a full list of exactly how much cash and assets Baselogic has, and how much these are all worth, they will attempt to turn all of this into cash and put it in the pot to be shared out between all those affected.
It should be noted at this point that we cannot make a prediction of how much cash there will be or how much each group’s share of the pot is. This is a complicated process with many different options for all of those involved to recoup what they are owed. The above is a simple explanation of the process.
Ticketholders should just keep one thing in mind: despite all the best efforts of Baselogic and the administrators, there may not be enough in the pot to fully repay all the tickets sold. Keeping up-to-date with announcements from Baselogic and letting them conduct this administration as carefully and thoroughly as possible is the best way to make sure that each and every ticketholder is given a refund.
Update: Fact Magazine points out that it may be possible for ticket holders to get full refunds now: http://www.factmag.com/2012/07/11/bloc-goes-into-administration/
Don’t forget to spare a thought for Baselogic
Bloc has been an incredibly successful festival for several years in an industry which has seen many festivals close. This must be a horrific process for all those who helped organise Bloc and all the work they put in.