UPDATE, 9:15 AM – The U.S. Bankruptcy Court just recessed for lunch after taking care of housekeeping matters in Relativity Media’s plan to escape Chapter 11 protection. Coming this afternoon: The studio’s financial experts will explain how the dollars add up, hoping to convince Judge Michael Wiles that Relativity’s plan meets the requirement of being “feasible.”
Lawyers hope to complete the proceedings today — but say it could extend to tomorrow.
PREVIOUS, 8:24 AM – Actor Kevin Spacey appeared in Bankruptcy Court, at least in a recorded presentation, urging Judge Michael Wiles to let Relativity Media out of bankruptcy protection — ahead of presentations in court of trailers for Kidnap and Masterminds.
With his agreement to serve as Chairman of Relativity Studios “we are enormously excited with this new chapter,” Spacey said. Alhough “you can rule whatever you want, you’re the judge,” he hopes that “we can go forward.”
Relativity said that “there’ve been some inaccurate reports” about the terms of its deal with Trigger Street Productions, which Spacey and Dana Brunetti own and operate. “They are not being acquired,” although the deals making the partners Relativity execs represent “a game changer” lawyer Richard Wynne says.
Netflix and IATM are the only major entities that still object to Relativity Media’s effort to emerge from Chapter 11 bankruptcy protection following days of negotiations with other creditors, the studio told the court.
Relativity made 11h hour deals with some of the most vocal objectors to the plan including CIT Bank, VII Peaks, Elliott Management’s Manchester Securities, and Colbeck Capital.
Netflix asked the court to postpone the proceedings since the studio has not answered “bread and butter fundamental questions” about financing, management, and ownership.
With a flurry of last minute press releases and agreements, and undisclosed information, “we have to make an anaysis as to whether the company can (live up to) its future performance obligations,” Netflix’s lawyer told the court. Relativity’s agreement with the streamer requires it to deliver an undisclosed number of films each year.
Relativity said that it made a deal with Netflix “at a time when no other studio would talk to Netflix …[The studio is] looking for a pound of flesh it’s not entitled to.”
Wiles said he “might have more sympathy” with Netflix’s case if it had sought more information in the discovery phase of the case.
CEO Ryan Kavanugh and his financing partner Joseph Nicholas were at the New York court room to watch the proceedings.
Wynne said that the company was “fundamentally out of funds” when it filed for bankruptcy. Since then “there has been a litigation extravaganza” from objectors, but “Mr Kavanaugh never took his eye off the ball” to resolve their complaints. “Those have been hard fought” and the company “wants to get back to the business of making movies.”