UPDATE, 2:24 PM: The show will go on this Monday. U.S. Bankruptcy Court Judge Michael Wiles just denied CIT Bank’s plea to delay by at least a week the February 1 hearing to consider whether Relativity Media is ready to escape Chapter 11 bankruptcy protection.
The judge didn’t comment on the merits of the arguments, but says that his ruling does not affect “the right of CIT to raise objections at the February 1st Hearing if CIT believes at that time that it has been prejudiced.”
PREVIOUS, 11:56 AM: Relativity apologized in a filing to the U.S. Bankruptcy Court for missing yesterday’s deadline for a key filing — but says that it doesn’t justify CIT Bank’s plea this morning to postpone a Monday hearing to decide the studio’s fate.
The delay was needed to “properly document” several new settlement agreements with creditors, and therefore “was in the best interest of all parties in this case.” The negotiations “have been complex and time consuming.” The studio “should not be penalized for [its] proper efforts to resolve disputes, avoid objections, and narrow issues before the Court.”
Relativity adds that CIT’s “unconvincing” in saying that it needs to see information about, and changes in, the studio’s exit plan before Monday when the details will be laid out in court. Changes “would improve CIT’s treatment in comparison to the current version of the Plan” and therefore “will increase the likelihood of confirmation over CIT’s objection.”
PREVIOUS, 9:33 AM: CIT Bank is steamed about late and missing information in Relativity Media’s case to escape Chapter 11 bankruptcy protection — and has asked U.S. Bankruptcy Court Judge Michael Wiles to postpone the potentially climactic hearing planned for Monday by at least a week.
The studio has “set the stage for a grossly unfair” proceeding on Monday, CIT says in a letter today. Relativity will ask Wiles to let it operate independently, without court oversight and free of many of the obligations that it couldn’t fulfill when it filed for bankruptcy last summer.
CIT loaned Relativity cash for its films Masterminds and The Disappointments Room and remains the leading opponent of the studio’s effort to become independent again.
The bank says that it’s impossible for creditors to determine whether Relativity’s exit plan is feasible: The studio says it has “significantly revised and updated” its financial model to account for its agreement to buy Kevin Spacey and Dana Brunetti’s Trigger Street Productions, as well as other recent developments. But that will be presented for the first time at the Monday hearing.
That means creditors who voted to support Relativity based their decisions “on an apparently obsolete financial model,” the bank says. It adds that “Under bedrock principles of fairness and due process, CIT is entitled to a meaningful opportunity to review and vet” the new model and possibly depose those who prepared it.
CIT also notes that Relativity’s final case for its exit plan was submitted about six hours past yesterday’s noon (ET) deadline — giving those objecting “less than two business days to analyze and address the arguments” before the hearing.
Relativity had also pledged to disclose changes to its plan by noon yesterday, and that “has still not been filed on the docket or shared with CIT.” The bank “should not be made to litigate in the dark, without even knowing what modifications have been made or how those modifications affect CIT or the Plan’s confirmability.”
Relativity calls CIT’s request “unfounded.” It has “continuously worked closely and in good faith with CIT to resolve their objections. Furthermore, we have received votes of acceptance for our Plan of Reorganization from the overwhelming percentage of our unsecured creditors while resolving the majority of the outstanding objections to our plan.”
A court decision to let Relativity escape bankruptcy “remains in the best interest of all of our stakeholders,” it says.