U.S. Bankruptcy Court Judge Michael Wiles scheduled a hearing for tomorrow after telling the company that he and others involved, including many creditors, haven’t had enough time to pour through the collection of agreements reached over the last few days to sell the TV operation — and leave other assets with CEO Ryan Kavanaugh.
“I applaud the efforts of everybody who worked so hard,” Wiles says. “But we have a bit of a due process issue here.” He added that he has “no objections to the process that led to the sale of the assets” — and “in theory” could approve the TV sale which he says is “consistent with the goal and purposes of Chapter 11” to keep the company going. But “there are issues to be finished about which contracts are to be included and under what terms….The parties are entitled to see the details” and that “was not possible” today .
Relativity lawyer Bennett Spiegel said that the company merely wanted Wiles to approve a $125 million agreement to sell the TV unit to a creditor group known in the case as Stalking Horse Bidders, and to assure the second biggest creditor — Manchester Securities — that he would approve its plan to buy Relativity’s debtor-in-posession financing agreement.
He added that the TV sale and other agreements would not “provide for working capital for the company going forward after October 20” when the deal is expected to close. By early January “we fuly expect to be back before your honor with some mechanism” to fund film and other units.
This morning RKA Film Financing filed an objection to the transactions citing insufficient notice.
“Since approximately 1 a.m. this morning, and as recently as just an hour before the filing of this Objection, the Debtors have filed over 750 pages of documents (as of the filing of this Objection) that this Court is being asked to approve today,” RKA said in a filing. “While RKA, and likely every other party but those drafting these documents, has not had any meaningful opportunity to review these papers in detail, the transactions this Court is being asked to approve today, on no notice to any creditor, appear to include” — a reorganization plan, a new debtor-in-possession lender, a sale of the television operations with “contradictory” and confusing schedules and a new first lien lender which includes Kavanaugh.
The CEO’s lawyer Van Durrer told Wiles that the bankruptcy case has been “a perfect crucible” for Relativity’s stakeholders “to come together and negotiate, request, beg, and even yell and scream and in other circustances threaten. But every single person spent about 60 hours with about two, 2-hour breaks from Wednesday through the weekend.”
He apologized for the late timing following “a weekend death march.”