To Ivan's distress, Carl is out of the festival (8)
I believe the answer is:
carnival
'the festival' is the definition.
(carnival is a kind of festival)
'to ivan's distress carl is out' is the wordplay.
'distress' is an anagram indicator.
'is out' indicates putting letters inside.
'ivan' anagrammed gives 'niva'.
'niva' going within 'carl' is 'CARNIVAL'.
'of' is the link.
(Other definitions for carnival that I've seen before include "Festive period" , "Festival of merrymaking and processions" , "Dvorak overture" , "Public merrymaking, usually with procession" , "Festive entertainment" .)