Rob da Bank, real name Robert Gorham, refused to pay his loan provider TicketLine back - Central London County Court heard.
The loan was taken out in 2018 to save the ailing festival which nearly didn't go ahead due to financial struggles.
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The on-going case questions whether or not Ticketline Network Ltd's £1m loan was directed to Gorham personally and whether he personally is responsible for paying back £650,000 — something he disputes.
The company claimed that it would feel more secure loaning out the money personally to Gorham and co-director John Hughes rather than the Bestival company itself.
Hughes accepted that the money would have to be repaid, however, Gorham allegedly does not and is fighting a court case which is expected to last ten days.
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He alleges that he never agreed to a personal loan and should not have to pay it back. Mr Gorham told the judge he is not very involved with the financial side of the festival.
"This was a multi-million pound, very busy business, with me driving the customer-facing side and the artists, a whole raft of things in the festival world," he said.
"The finance and accounting was not my department." He added: "I never signed up for a personal loan."
Gorham's festival, Bestival, was taking place on the Isle of Wight since its inception in 2004, before moving to Lulworth Castle in Dorset. The festival has welcomed some of the biggest names in music, including Elton John, Snoop Dogg and Stevie Wonder.
The trial continues.
Aneesa Ahmed is Mixmag's Digital Intern, follow her on Twitter