Nashville-based music startup Dart Music, founded by CEO Chris McMurtry, has filed for Chapter 11 Reorganization.
Dart, which launched in 2015, was among the startups in the inaugural class for Project Music, an incubator for music technology startups, housed in the Nashville Entrepreneur Center.
Dart is the first automated platform for independent classical musicians to upload and distribute their music directly to iTunes, Spotfy, Amazon, and more. The services allows musicians to pay a low flat fee, upload their music for digital distribution to online stores, and be able to sell their music without paying royalty fees.
Dart’s Board of Directors, which includes McMurtry, Nashville technology entrepreneur Mark Montgomery, and veteran Nashville music industry executive Joe Galante, approved the Chapter 11 reorganization. Nelson Mullins Riley & Scarborough LLP is serving as Dart’s legal advisors in the restructuring.
The process allows Dart to continue normal business operations while restructuring the company’s finances and contractual relationships.
“We worked hard to avoid this step,” said McMurtry. “Over the last several months, we’ve attempted to restructure the obligations on our 6% Convertible Promissory Notes. Despite being presented with a number of attractive scenarios to restructure outside of Chapter 11, certain of those note holders have refused to reach an agreement with the company that would allow it to reach new heights by providing it with the short-term liquidity necessary to achieve its objectives. It’s become clear that this process has reached an impasse and that any further delay would unnecessarily waste valuable resources of the company. Our filing today is a result of our loss of revenue during the past several quarters associated with the normal ebbs and flows experienced by start-up companies, combined with the reality that our negotiating efforts with our note holders shows no apparent prospect of a near term resolution.”
“The company, our employees, partners, creditors, and shareholders will be best served by an orderly, court-supervised restructuring,” McMurtry continued. “We filed with a strong core business and the liquidity resources necessary to carry out our restructuring plan. Our restructuring will maintain Dart as the leading provider of metadata services globally. We believe this action will allow us to restore our company and take it to new heights.”
According to a statement, as Dart Music navigates the Chapter 11 process, the business will continue to provide wages, healthcare and other benefits to its associates, fund its 401(k) contributions, and pay suppliers and vendors for the good sand services it receives throughout the restructuring process.
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