The financial fallout from the collapse of Soundwave, once one of Australia’s biggest promoters and the company behind Australia’s largest heavy music festival, is threatening to become a never-ending story.
Soundwave founder AJ Maddah announced the closure of the company late last year along with the cancellation of Soundwave Festival’s 2016 event. The company left behind it a legion of disappointed fans and a mountain of debt.
Administrators continue to paw through the convoluted web of debt in which Soundwave has found itself and the question of just when creditors — a list that includes every band on the ’15 lineup — will receive their money is still up in the air.
In fact, according to a recent circular authored by Deloitte, Soundwave’s administrators, some of the people who have already received money from Soundwave may be sued to get it back, as they may have been given unfair preference.
“As discussed in the Report to Creditors pursuant to Section 439A of the Corporations Act 2001 dated 21 October 2015, should the Company be placed into liquidation, the liquidators have the power to recover voidable transactions,” the circular reads.
“We have undertaken a preliminary review of the Company’s bank statements for potential unfair preferences in the six months prior to our appointment and have identified 33 payments made to 13 creditors totalling $557,000. I note that investigations are ongoing.”
However, it’s important to note that no decision has yet been made on the so-called “voidable transactions”. It’s also not clear just who the creditors who received “unfair preferences” are, though Soundwave certainly had its share of angry creditors.
“Generally such actions are costly and are likely to require Court applications. As such, the liquidators may seek legal advice as to the commerciality of pursuing these actions and whether it is in the creditors’ best interest.”
“Furthermore, the liquidators have a duty to report to the Australian Securities and Investments Commission in relation to the demise of the Company and report any breaches of the Act.”
Elsewhere in the circular, Deloitte write that Hounds of Hell Pty Ltd, the new operating company set up by Maddah after taking down Soundwave Pty Ltd, was placed into liquidation by Maddah earlier this month.
A meeting of the creditors of Hounds of Hell was scheduled to take place last week, with Deloitte writing that they will soon meet with the liquidator to discuss “possible recoveries in the liquidation”.