Update: Six Flagging — Creditor Asks Court to Remove Dan Snyder from Six Flags
Somebody's been reading Cheap Seats' coverage of Dan Snyder's theme park chain, Six Flags...
I heard this morning from Lance Laifer, CEO of Resilient Capital Management. That's an investment group that sunk some sum in the small seven figures into Six Flags, and doesn't want to walk away with nothing. Laifer doesn't like what he's learned about Snyder's company since it filed for Chapter 11 bankruptcy protections last summer.
Yesterday, Resilient filed a motion with the bankruptcy court asking the judge to remove Snyder and the rest of the Six Flags management team and appoint a trustee to run the company while the case is settled.
Much of the filing is way over my head, with talk of PIERs and EBITDA and the like. But the meaty parts of Reslient's argument in urging that the court "replace Debtor's management" are right in my wheelhouse.
Resilient contends that the Snyder et al should be tossed out for padding their wallets and wasting Six Flags shareholders' money through transactions between Six Flags, a public company Snyder controls, and Red Zone, a private investment firm he controls. Two of Snyder's conflicted-out-the-wazoo deals — the sale of 40 percent of Dick Clark Productions from Red Zone to Six Flags, and a licensing pact with Johnny Rockets, owned by Red Zone, that pays Red Zone 5 percent of the sales of all overpriced burgers at Six Flags — were particularly heinous and damaging to Six Flags' fiscal fitness.
"These funds [used to buy Dick Clark Productions], in addition to the funds used to pay Johnny Rockets royalties and funds used to pay for Johnny Rockets restaurants inside Six Flags parks, could have been used to easily avert a bankruptcy," reads the Resilient filing.
Asked for a comment on Snyder's behavior, Laifer tells me:
"Six Flags is clearly and obviously being used and abused by Mr. Snyder and Red Zone to further the economics of Mr. Snyder, certain members of the [Six Flags] board of directors and management, Johnny Rockets, Dick Clark Productions and Red Zone entities at the expense of all Six Flags stakeholders.
"Members of the management team have exacerbated the situation by emulating Mr. Snyder's behavior in recklessly pursuing their own self interests. Certain advisors and agents to the company have participated in these shenanigans for their own benefit. The board of directors has not stopped this behavior and has repeatedly violated their fiduciary obligation. We are hopeful that the court will recognize what is going on and put a stop to this immediately, if not sooner."
Makes sense to me. The next hearing in Six Flags bankruptcy case is scheduled for next Friday in the U.S. Bankruptcy Court for the District of Delaware.