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Saturday, October 1, 2016

Silver Lake’s Sunset Junction festival still draws a crowd – in bankruptcy court

Photo by Clinton Steeds/Flickr

From the Butthole Surfers to the IRS, the last-minute cancellation of last year’s Sunset Junction Street Fair in Silver lake has left a long list of unpaid bands, food vendors and government agencies  now wanting their money back and debts repaid.  But that’s going to be tough because the nonprofit that organized the 30-year-old festival filed for Chapter 7 bankruptcy protection in December as it seeks to liquidate its assets.  The Sunset Junction Neighborhood Alliance declares only $500 in assets (office furniture and supplies) and $928,000 in liabilities, according to court documents. Among the debtors:  Michael McKinley, the former hairdresser who drew praise and criticism as he oversaw a festival that grew in size and stature.  McKinley, the executive director, is owed $50,000.

McKinely is among more than 200 creditors listed in the bankruptcy filing. The list reflects the festival’s popular music line up that featured well paid, major acts and up-and-coming musicians. Creditors included well known bands – the Butthole Surfers and Ozomatli, each owed $20,000 – and newer groups –  The Growlers ($5,000) and Yellow Red Sparks ($150) – as well as  music promoters, Spaceland Productions ($24,000).

Also owned money are the business people and nonprofits that had purchased booth space to hawk everything from kabobs to causes:  Kettle Corn Kings ($1,000);  LA Gay & Lesbian Center ($350); Señor Fish ($1,200); and Pet Harnesses by Ines ($550).

Other notable creditors were attorney Philip Tate ($30,000), who tried and failed to convince the city’s Board of Public Works to grant the festival the necessary permits;  the IRS ($20,000) and CBS Radio ($61,500).

Bankruptcy attorney Jonathan Leventhal, which is representing the nonprofit,  declined to comment.

One of the creditors is Piyawan Sae Tang, the “Chicken Lady” vendor The Eastsider wrote about shortly after the festival was cancelled.   Tang said she paid $1,300for the booth and spent an additional $2,000 for chicken and additional supplies. Her V&R Thai-Chinese booth took in about $4,000 during the 2010 Sunset Junction street fair and was looking forward to selling more chicken skewers and other food at last year’s event. Instead, she scrambled to find a booth at another festival in Orange County after Sunset Junction was cancelled.

Tang said she paid a $1,300 booth fee in cash and has called repeatedly to find out when she will get her money back. The only response has been a letter notifying Tang that she is one of the more than 200 creditors waiting to get paid.

Sunset Junction festival bankrtupcy filing



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29 comments

  1. what a mess……

  2. So McKinely was paying himself $50k a year?

  3. People who run/work for non profits get paid.

  4. if they only have $500 in assets where did all the money paid from vendors go?

  5. Just want to say that Silver Fake has jumped the shark and has become a jumble of nimbys whining know it all phony PC babies with babies suburban vegan eating volvo yuppies. Everything funky and fun has ceased. Special shout out to the business owners (Pull my 420daisy! and Barwhatever) in the Junction. Next to go is the Eagle.

    • Straight up. Not at all what it used to be.

    • Proud Leather Boy is right. What has happened here in the Junction is tragic. Wealthy Anglo hipster families overtook anything that made this place great. Gutted are all gay and Latino businesses. It is a grotesque mix of wannabe straight hippies and more recent, a massive trendy Asian influx. Very depressing. They wouldn’t have stepped FOOT in this area years ago.

  6. Yes, he did do a really good job. His mistake was in losing sight of the neighborhood this was supposed to be about. He got too good at organizing a major regional festival — and that brought on the ire of the neighborhood it was supposed to be about. He made it too big, too pricey. For instance, a neighborhood event should not be spending $20,000 for any band — just stick with the local cover bands.

    Then the city added the final straw: it started charging hundreds of thousands of dollars for the fair — unlike other festivals, like the Day of the Lotus Festival in Echo Park that doesn’t have to pay the city anything. That was imposed with fairly short notice the year before — and the Festival fought and tried to get an exemption, or at least a serious reduction — it certainly was too late to cancel the event as contracts are signed many months in advance.

    But bureaucracies drag anything on and on and on. So the dispute about the previous year’s charges was still pending as this past year’s festival was nearing. And this past year’s event became hostage to the dispute. But by that time, it was again far too late to cancel, without the result being complete bankruptcy, as everything was already contracted — as you can see from the list of creditors in the bankruptcy case, all the bands, all the booths, all the rides, all the staff, etc.

    So, in the end it was the city’s new, huge fees and refusal to at least make them more reasonable that bankrupted the entire organization. That much money just was not available from funds on hand from last year’s event, nor could it be supported by even the $20 door charge for the event that everyone was complaining was far too much. And it is the city that doesn’t give the permit until the last minute, so there is no choice but to enter all the contracts long before the city gets around to doing its part and dealing with the permit.

    And Garcetti should be castigated for the false and slanderous vilification he started. That was truly dirty politics — and by a city that has become seriously money grubbing at every turn, from these fees, to red light camera fines of $500, to street parking fees at $3 and $4 an hour, to price hikes at every turn. This confrontation over the festival fees wasn’t about McKinley — it was a money grubbing city government imposing its mordida and blackmailing the event — for this festival, all led by Garcetti.

    Whether you were for or against this festival (in the later years, I was against it as no longer a neighborhood affair), it is the city’s action and conduct that brought on this nasty confrontation and bankruptcy. Michael McKinley worked damn hard all year on this festival and the other things the group operated. He probably should have somehow come up with the funds to make last year’s payment earlier — but they just did not exist, and at the last second became available only by outside individuals lending their personal money, but too late.

    As for McKinley’s pay, I don’t know how much he got. However, I do know that most of these people running these “non-profit” neighborhood groups are paying themselves in six figures, as do the people running most non-profits of all kinds. None of the employees of the nonprofits can work 40 hours a week as volunteers. McKinley had to work hard full time year round to organize this, and to handle the other things the group ran (such as Tsunami coffeehouse), all of which is being lost to this bankruptcy.

    • yea you make a lot of good points. people think Sunset Junction’s demise is the result of bad karma. The reality is the city is going after us in desperation whenever it can. The reason Sunset Junction got shut down is because the city smelled blood. People really need to wake up. Shutting down Sunset Junction actually costs the city more money indirectly than if it lowered the festival’s fees. Now none of the vendors, business, promoters, bands, etc make money ( or pay taxes on that money) Trying to make money this way is very short sighted but ultimately it kills more opportunities than it creates. Like I said people really need to wake up to what’s going on here.

      Not saying McKinnley didn’t do a bad job of dealing with the community but that has almost nothing to do with this situation

      What’s really getting lost is something

      • @ Mark – Many of the local businesses actually shut down that weekend because their regular patrons weren’t able to access the street, so I don’t know if that’s necessarily true. I’m pretty sure the city would spend way more on police than it would accrue in tax revenue from vendors.

        • The festival wasn’t shut down because McKinnley wouldn’t pay police fees or even the actual cost to the city in services. The city was basically charging a tax that was more than the cost of services and actually than the festival could even make beyond its expenses.

    • One thing you neglect to mention is that after last year McKinley signed an agreement with the city stating he would not receive permit approval this year until the previous year’s fees were paid. The biggest increase in cost to the city was due to the police presence required at this festival. The safety concerns with the amount of people attending, alcohol being served, and the huge disruption to traffic on several major streets all play into that. Clearly the city errs on the side of too many officers rather than get caught with too few in an emergency.

      I don’t see how you can say he “got too good at organizing a major regional festival” when he couldn’t pay his outstanding bills in accordance with an agreement he signed.

      • There’s way more to the story than he just didn’t pay the city a fee. The city put him in a position of signing something they presented at the last minute or not getting a permit. then There is the question of the legitimacy of the fee in the first place because the ended up actually wanted 200,000 less this year than last which calls into question the original numbers. Its demanding money in this way at the last minute that becomes a form of city extortion. Anyone who wants to do a little investigation will see that this was an attempt at a cash grab more than anything. Most people who support this decision don’t want to look to deeply into this because they just wanna blame it on mismanagement.

    • I am usually the first to characterize the City of LA as money-hungry, but I will have to disagree with you here. The reason these other fests you mentioned don’t have to pay this huge permit fee is because they’re free! McKinley was presented with the choice to keep SJ free or pay the fee and he choose the later. Terrible decision.
      I agree with the city. If someone’s going to throw a for-profit fest (and pay themselves $90K=!), then charge them for every city service they are using. Why should we subsidize this event??

  7. ^ That was in response to Tom

  8. @Lauren is correct, the city charged McKinley because the fair was charging admission and not free as it was for the first 20 years. @mark is a shill for McKinley.

  9. How can the SJNA claim only $500 in assets when they run the Saturday Farmer’s Market as well as the Tuesday Farmer’s Market? Sounds like someone is lying.

  10. Income/expense records for past year or so should surface as part of the bankruptcy proceedings, i assume.

    • all non profits financial records are public already. the festivals expense records where reported in an article I think in the LA weekly or maybe he Times online I can’t remember also someone actually posted a copy of the festivals tax return on one of these blogs.

      • @mark-
        “reported in an article i think…”, “maybe the Times online …”, “I can’t remember…” “posted… on one of those blogs”

        If you don’t have facts then STFU.

        • I can’t do your homework for you dumbass. I’m just telling you the facts are out there and I saw some of them. If you’re not even willing to do little research before posting your ignorant comments please dont boher posting… oh and ou don’t have to do hardly any research to know that ALL non profits financial records are public.

      • Being public doesnt mean you can just logon and see them on the internet. You have to know whom to ask and there is probably a fee. And, i would guess, theyre not comprehensible to average people.

        • i don’t understand why people cant even do a little bit of research before posting. you don’t have to guess anything. you can get find out how to get financial statements and there is even articles on how to analyze them (even though they are not that hard to understand.) With just a little research i found a ton of info on the subject as well as one of the articles i read that mentions what the junction reported on they’re last return. why don’t you see if you can find it.

          oh and if you want your very own copy of any Non Profits records here’s how (and its free btw):

          Write to the IRS. Include the name of the non-profit, the years of information you want and the type of tax return you’re requesting to view. Form 990, filed by non-profits, should give you all the information you need. Send your request to:

          Commissioner of Internal Revenue

          Attn: Freedom of Information Reading Room

          1111 Constitution Avenue, NW

          Washington, DC 20224

  11. Ha I’m not a shill for Mckinley that’s just a lazy argument against anyone who disagrees with you. I think Mckinley did an awful job but that had nothing to do with why the festival got cancelled.

  12. Street fair goers were NOT left out of luck by the cancellation of SJFest. Because only 3-4 miles from Sunset Junction that same August weekend a new street fair was up and running in its 2nd year of operation.

    McKinley and his organization didn’t have any tickets for people who preferred to attend the new street festival.

    Those presale tickets were available exclusively at the Northeast Division Police Station for the NorthEast Carnival produced by the Los Angeles Police Department Northeast Station with all profits going to the LAPD Northeast Youth Charity.

    I haven’t seen their financial statement, but I’m guessing their cost structure beats McKinley’s or just about anyone’s, for that matter.

  13. This sucks I’ve had many good times at these events and will miss them dearly.

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