We want our money, Google tells SFX

SFX Entertainment’s attempts to retroactively scrap an advertising agreement with Google have been met with a stern rebuttal by the internet giant’s lawyers, who have announced their intention to pursue the nearly US$64,000 owed by the bankrupt dance music conglomerate to Google’s DoubleClick ad-serving service.

SFX argued in a court filing on 3 June that, as then-subsidiary Beatport “no longer requires or uses the services” provided by Google” – and per section 365(a) of the US bankruptcy code, which provides that a debtor may, “subject to the court’s approval, assume or reject an executory contract or unexpired lease” – accruing “administrative expenses on account of the DoubleClick contract will not offer any additional value to the debtors’ estates and, hence, rejection of the DoubleClick contract effective as of the rejection date [3 June] is appropriate in order to relieve the burden on the [SFX] estates”.

In other words, by June SFX had long given up on Beatport (it’s still up for sale) and ceased to use DoubleClick to market the music download store online.

However, Google – represented by law firm White and Williams LLP – has other ideas, as new court documents show, and will seek a total of $63,800.81 from SFX, “a portion of which relates to invoices for DoubleClick services provided prior to the petition date which remain unpaid”.

“If a debtor elects to continue to receive benefits from another party, the debtor is obliged to pay for those services”

White and Williams argue that “Google continued to provide the DoubleClick services to SFXE [SFX Entertainment] during the course of the debtors’ bankruptcy cases” and that SFX “enjoyed the benefit of those services”.

The lawyers add: “If a debtor elects to continue to receive benefits from the other party to an executory contract pending a decision to assume or reject the contract, the debtor is [obliged] to pay for the reasonable value of those services as an administrative expense.”

SFX declared bankruptcy on 1 February and has since then been steadily auctioning off a number of its subsidiaries, including ticketing business Flavorus to See Tickets parent Vivendi and marketing agency Fame House to Universal Music Group.

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