Michael Robert Fortune and Carl Derek Faulds were appointed joint administrators of Elastic Artists Agency Ltd on 7th December 2015. The administrators’ proposals are now available for creditors and can be accessed here
The company was incorporated on 19th May 2004 and its business was to act as a music agency for artists throughout the UK and Europe.
Originally a team of just two, the company grew to employ 13 agents, 7 assistants and a 5-strong management team. The headquarters were based in London but the company also held offices in Paris and Germany with service locations in Manchester and Liverpool.
The agents, who were employees of the company, were based throughout the UK with many working from home and they were responsible for their own roster of artists and promoters.
The business model adopted by the company was that it would act as an intermediary whereby the promoter would book artists through the agents and pay to the company the deposit for the performance
In 2014, an internal disagreement within the company led to a number of staff leaving. One of the downsides of losing employees was that the agents would often take their artists with them to other agencies. If the artist was one of the more popular acts then this would have an immediate reduction on the company’s turnover. This was unfortunately common practise in the industry although employment contracts were drafted with the intention of dealing with this problem.
The company employed new agents however due to the loss of senior agents and an anticipated future gap in cashflow whilst the new agents became effective, the director approached the company’s bank in an attempt to secure further funding.
Unfortunately it became clear that the bank were not willing to provide any further funding and as a result the director had concerns over the future of the company. Furthermore a reconciliation of the client accounts showed that there was a significant shortfall on the monies held on behalf of the artists and promoters.
The director concluded that a formal insolvency procedure was required to protect the company’s assets whilst securing the best outcome for creditors, possibly by way of a distressed business sale. Administration was chosen because an appointment could be made quickly to achieve protection for assets, particularly the cash held in client accounts, and put an office holder in place to make pressing decisions before balances dissipated or landlord actions reduced the available assets.
Portland were subsequently appointed joint administrators of the company on 7th December 2015.