Relativity Media, lenders seeking to buy the studio and other creditors have made additional progress to resolve some disputes ahead of a major U.S. Bankruptcy Court hearing Tuesday — though the studio’s relationship with Manchester Securities, one of its biggest lenders, remains raw.
A committee of Unsecured Creditors says in a court filing that it has dropped its objections to the fast-moving proposed calendar for an auction now that it has been “given a meaningful role in that sales effort.”
Meanwhile, it seems that Manchester Securities’ emergency effort to delay the hearing failed to impress Judge Michael Wiles. In a wide-ranging procedural order this afternoon, he says that Tuesday will be the first of two “omnibus hearings” on disputes involving Relativity Media’s plans to emerge from Chapter 11 bankruptcy protection.
Creditors who need a ruling from him had better be ready to speak up: The next omnibus hearing won’t be held until September 25, though Wiles says that under some circumstances he might allow expedited or emergency sessions.
“Parties are encouraged to settle disputes,” he says. The order also mandates, among other things, that participants who want to access the trial by phone “may not use speakerphones, unless first authorized by the Court.” They also “must put their phones on ‘mute’ except when they need to be heard” and may not “put their phones on ‘hold’ under any circumstances.”
In a separate filing, Relativity returned fire at Manchester, which this morning asked to delay Tuesday’s hearing. A valuation filing made late Friday represented “trial by ambush,” the lender alleged. It added that it is also waiting to depose Relativity CEO Ryan Kavanaugh.
The studio counters that Manchester expresses “faux surprise” at the Friday filing.
Manchester “has had access to the [Relativity] data room for weeks, and Manchester itself has received voluminous information in response to their 33 document requests,” Relativity says. Indeed, the studio claims that it is “doing everything in [its] power” to protect the value of its assets, “notwithstanding Manchester’s repeated attempts to leverage the process to their own advantage.”
Relativity acknowledges that its Friday filing was late. The court agreed to let it submit its material as late as 3:30 ET, past the original noon deadline. The studio missed that target too but “was in contact with chambers to notify the Court with respect to the delay.”
But it should not have mattered, it says, because the valuation information offered on Friday “conforms” to testimony that Relativity’s Chief Restructuring Officer Brian Kushner provided on August 11.
Other lenders say, in a separate filing, that the valuation “may not be relevant here in light of Manchester’s limited rights” under its debt agreements.
Manchester also said this morning that it believed a deposition by Kavanaugh might contradict the studio’s valuation information.
Yet the lender “failed to make such a request” to question Kavanaugh until Friday. If it wanted to see whether the CEO might say something that differed from Kushner’s claims, then Manchester “had ample time to do it, and not waiting until the last minute, when his counsel would be in or travelling to New York” from Los Angeles for tomorrow’s hearing.