The most outspoken critic of Relativity’s plan to emerge from Chapter 11 bankruptcy protection just added a few objections ahead of a court hearing on Thursday. RKA Film Financing says in a filing this afternoon that Relativity’s revised plan leading to a potential sale in October is too vague about the lender’s rights vs those of other lenders. In addition, it says, the proposed calendar moves too quickly for those with objections to the process to figure out what’s going on, and then weigh in.
RKA has a special concern: It says that it loaned about $85 million specifically for Relativity to buy ads for several still unreleased films including Masterminds, Kidnap, Somnia, Disappointments Room, and Lazarus — which were set up as independent companies and used as collateral. But it charges that Relativity instead used most of the funds to prop up its balance sheet.
RKA now wants to be able to take the films, and license them to another distributor. It has separately sued Relativity CEO Ryan Kavanaugh and others at the company for fraud. Relativity then countersued, charging that RKA tried to interfere with a business deal and extract cash for itself.
RKA asked U.S. Bankruptcy Court Judge Michael Wiles to make it clear that other lenders don’t have a claim on the movies.
RKA also objects to the 30-day proposed period between the time when a committee would be formed to represent unsecured creditors and the time when people owed money can investigate and challenge proposed sale plan. They still might have to file their complaints by September 6, even though the court last week agreed to push a sale date back two weeks to October 5.
The challenge period “should likewise be extended by the same time period at a minimum to allow a more fulsome opportunity for parties-in-interest to evaluate such claims and causes of action,” RKA says. The group also wants the judge to grant it “immediate standing” to object since it “has the most incentive to maximize the value” of its claims.
RKA says in a footnote that it is “in discussions” with Relativity about changes “which may address some or all of the issues” it has raised. It made today’s filing “to preserve its rights pending such resolution.”