Starworks Group has apparently shut down almost exactly three years after Vice Media made a majority investment in the company.
Starworks was founded in 2000 by James Grant and it grew into a premiere agency representing fashion industry talent like stylists, makeup artists and photographers. But after nearly 20 years in business, it abruptly closed up shop, industry sources told WWD. The closure is said to have come last week, the three-year anniversary of SWG’s official tie-up with Vice, which at the end of July 2016 partnered with and bought a controlling stake in the agency.
However, it’s thought that Vice never actually integrated the Starworks business into the larger Vice Media fold, and that the Vice executives, including former copresident Andrew Creighton, who led the investment in Starworks, left some time ago. Creighton officially left Vice in 2018 amid sexual harassment allegations.
At the time of the Starworks investment, Creighton said the two companies would combine to bring SWG’s “vision to life through insights, data, innovation and the best content in the world.” However, Vice is said to have had little to no involvement in Starworks’ operations since, leaving that to Grant as chief executive officer, although Vice never formally divested.
Nevertheless, Starworks seems to have overextended itself in the wake of the Vice investment. Sources speculated that SWG has been dealing with mounting debt and had trouble paying clients and even some freelancers for work. A number of lawsuits from this year support the theory, including eight filed in local New York court and at least one filed in local Los Angeles court. Multiple calls and e-mails to Starworks’ offices were not answered. A spokeswoman for Vice declined to comment.
The New York lawsuits are relatively straightforward financial collection cases from a variety of companies that partnered with Starworks and are now seeking payments, typically in the tens of thousands of dollars, which are long past due. Popular fashion blog Man Repeller sued Starworks in July for $40,000; event producer Inca sued at the start of August for $42,000; a company called Code Gray sued in January for $28,000; One Model Management sued in February for $10,000 owed to a model; Starworks’ former chief brand officer Gavin Francis Thomas sued in February for $150,000 in unpaid wages and vacation time; creative agency PG & Co. sued in June for $34,000; Commissioners of the State Insurance Fund sued in July for $15,500 in missed workers’ compensation fund payments.
Taken together, the total allegedly owed to these companies comes in at less than $200,000 and doesn’t seem like it should be detrimental to a well-established business. But the lawsuit filed in Los Angeles paints a very unstable picture of the company.
The lawsuit was filed last week by SWG subsidiary Starworks Artists, a sister agency based in L.A. with separate management that remains operational and represents talent in the beauty industry. SWA began in 2010 as Tenfold Talent, a consulting and recruitment firm started by Samer Fawaz and Lisa Walker, who remained in leadership roles and each retained 15 percent ownership of SWA when SWG acquired a controlling 70 percent stake. But Fawaz and Walker, who appear to be behind the SWA lawsuit, claim that Grant has run parent company SWG “into the ground.” The suit accuses Grant of “a history of devious and fraudulent tactics” and “a long list of shady, fraudulent and simply poor business dealings.”
Although SWA argued in its complaint that Grant has “absolutely no managerial control” of SWA or access to its financial accounts, the agency claims that he this year entered into at least four loan agreements as “Starworks was in desperate financial straits.” And that he did so without the knowledge or consent of SWA principles Fawaz and Walker.
The agreements, which are technically forward cash payments on future SWA accounts receivables but in effect loans, were made with factors NextWave Enterprises, Union Funding Source, West Coast Business Capital and Fox Capital Group. The deals total less than $1.4 million, but despite the payments purportedly being made through agreements signed by Grant against SWA’s business, SWA says it never received “one penny of the proceeds of these loans.” It even claims to have not known of the agreements until it received default notices from the lenders. Nevertheless, an SWA spokesman said that the sister agency is still fully operational and doing business out of L.A. as usual. Despite being a direct subsidiary of SWG, the spokesman said SWA’s financial accounts have remained separate.
But SWA does accuse Grant of indebting it through the four unknown deals with the factors. It also accuses Grant of ruining the business of Starworks on the whole due to his mishandling of the parent company, its operations and employees and even some personal issues, including drug and alcohol use and sexual harassment of employees. SWA also claims that Grant misappropriated funds from employee 401k accounts and used corporate money for personal expenses like travel, home improvement and personal entertainment and parties.
Given SWG’s allegedly “dire straits,” SWA claims that Vice has been pushing for Starworks to declare bankruptcy and that “in a desperate attempt to save Starworks from failure,” Grant took out money against SWA, “all the while knowing that Starworks would likely never be able to repay its obligations.” However, Starworks has yet to file bankruptcy, according to federal court records.
In addition to suing Grant as an individual, SWA named each factor as a defendant in the suit, arguing they should have known that Grant was misrepresenting his position with SWA and that they made no effort to ensure that the money was actually being used to fund the company.
SWA is asking the court to declare as unenforceable all four of the financing agreements Grant entered into. Should the agreements be left intact, SWA said they will result in levies against its assets and could potentially prevent payments to the artists it represents and its employees. However, an SWA spokesman reiterated that that is not a current reality and that SWA is currently in good financial standing and fully operational.
A representative of Grant could not be reached for comment.
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