Lyte is forecasting a doubling of its gross profit next year despite initiating a liquidation of its business using a procedure designed to clear unsecured debts.
A quickfire sale of the company is under way, with suitors told they have until October 11 to submit an offer. In a prospectus sent out to potential buyers and seen by TheTicketingBusiness, Lyte – which ceased operations more than a week ago – has forecast a gross profit of $5m this year and $10m in 2025.
Lyte initiated a General Assignment for the Benefit of Creditors (ABC) on September 17 through which its assets were transferred to the newly formed Lyte Liquidation LLC. An ABC is a business liquidation device “available to an insolvent debtor as an alternative to formal bankruptcy proceedings,” according to the American Bar Association. Benefits of this device are to transfer the assets of the troubled business to an acquiring entity “free of the unsecured debt incurred by the transferor”. Further, the ABC enables a winding down of the company “in a manner designed to minimise negative publicity and potential liability for directors and management”.
Prior to its current plight, Lyte had raised a total funding of $53m over four rounds between 2019 and 2021, according to the Tracxn website.
Closed bidding process
As seller, Lyte Liquidation will oversee the process, select the winning bidder and provide some assistance with the transfer of assets to the buyer. This will be a closed bidding process, handled by Los Angeles-based distressed asset resolution specialist Resolution Financial Advisors, whereby the names of the bidders and the bids will not be disclosed to other interested parties. Bids must be submitted by the end of the business day on October 11, and include purchasing entity details, purchase price and assets to be purchased.
The sales prospectus notes that the assignee “will use a portion of the proceeds received from the sale for the administration of the estate, and will distribute the balance to the creditors of Lyte”.
‘Strong reputation’
The sales document paints a favourable picture of Lyte’s current situation and future prospects. It has, according to the document, grown gross profit by 165% per year since 2020, and expects to make around $5m this year. That figure is expected to double next year and reach $15m by 2026.
“Lyte has established itself as a leading player in the ticketing industry, with a strong reputation for innovation and customer satisfaction,” the prospectus claims. It highlights Lyte’s partnerships with Danny Wimmer Presents, Bottlerock Festival, Mad Cool and the Association of Volleyball Professionals.
Resolution Financial Advisors offers an array of services to clients facing financial challenges. It helps its clients in “determining which liabilities are the most important to pay; managing the impact on employees, officers, and directors; solving for fiduciary obligations”.
“In many cases, alternatives to bankruptcy are available,” Resolution’s website states. “We offer options such as such as ABCs and other bespoke solutions. These options can provide more flexibility, less publicity, lower cost, and ultimately greater value preservation. At times, a formal insolvency process is not needed at all.”
Resolution’s Ryan Small, who is leading the process, has not responded to several requests for comment from TheTicketingBusiness. Lyte and its founder Antony Taylor (pictured above) have also not made a public statement on the company’s position or responded to TheTicketingBusiness’ enquiries.
What about Lyte’s clients?
Lyte was the ticketing partner of Lost Lands Festival, which took place over the weekend in Ohio. Over the course of last week, with Lyte no longer active, Lost Lands took to social media to attempt to assuage patrons’ fears about whether they would be able to access their tickets or funds derived from selling tickets. One reseller asked for an update concerning a payout of almost $3,000 that was due on September 23.
The Festive Owl, an expert on the US festival scene, told TheTicketingBusiness that Lyte’s troubles took their organiser partners completely by surprise. As of the weekend, these partners had received no correspondence from Lyte and their enquiries had been met with automated responses.
There is concern that Lyte’s collapse will have a damaging impact that stretches far beyond its own partners.
The Festive Owl warned of “small promoters, in particular, facing years of court cases in hopes of recovering any funds tied up with Lyte – a bleak situation”.
“Another key issue,” he added, “is that attendees are being left high and dry, which continues to erode confidence in the industry. Early ticket sales are hitting historic lows because people are hesitant to invest unless they are absolutely certain the event will happen and they can attend. This creates a vicious cycle, where small promoters – unable to cover pre-show costs without early ticket sales – are struggling to survive.”
The road to collapse
Last week, TheTicketingBusiness reported that chief executive and founder Taylor departed Lyte a number of weeks before it ceased activities. Taylor left his role, according to people familiar with developments, following disagreements between key figures at the top of the business over Lyte’s future direction.
Insiders say that Lyte’s workforce was notified that the company was ceasing activities and product development during an all-hands meeting during the week commencing September 9. Later that week, access to company property was restricted for most employees.
While there are accusations of poor management decisions, more specifically there is a belief that the company made an error in acquiring Festicket’s assets after the UK-based ticket operator went into administration in 2022. One person familiar with the transaction described it as “the stupidest deal ever done”. Another said Lyte “went downhill pretty much” after the transaction completed. According to a filing by Festicket’s administrators to Companies House in 2022, Festicket owed 155 promoters just under £18.5m (€21.9m/$24.3m) when it collapsed. Creditors included AEG Presents, Event Horizon and Festco.
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