With the deadline for bids on Relativity having passed, it looks like another business partner of the Ryan Kavanaugh-led company has a problem with what’s going to happen next and who will own the joint – not that we know specifically what EuropaCorp is really upset about or what they say they are owed. In a heavily redacted objection filed Tuesday as to where its deals with Relativity end up, the Luc Besson-created company “hereby reserves all of its rights to raise any appropriate objection at the conclusion of the auction or at the sale hearing, or to consent to the assumption and assignment (REDACTED) when the Debtors confirm the assignee of the EC Agreements.”
But with page after redacted page and a motion to seal before the court, what EuropaCorp actually is referring to in its motion (read it here) — which Netflix, along with HBO, Viacom and others with deals with Relativity, have filed similar self protecting versions of the past few weeks — is not clear.
However, we do know that little over a year ago, Relativity and EuropaCorp entered into a distribution and marketing 50-50 partnership — now known as Red. Under terms of that deal, EuropaCorp agreed to pay about $130 million over six years toward its stake and each separate company would use the joint venture to distribute its own films and then co-produce and co-finance each other’s films.
EuropaCorp was happy to enter into the joint venture, which was to be run by Relativity’s Tucker Tooley and EuropaCorp CEO Christophe Lambert, so that it could stop paying distribution fees to studios, which it did for its box office hits Lucy and Taken. The Relativity bankruptcy hit only two months before the first film was going through Red – Transporter: Refueled. Since Relativity no longer can meet its obligation to EuropaCorp, there has been much speculation as to what would happen and whether the company would look for another partner. Right now, the well-heeled EuropaCorp is in the position of holding the bag with no partner for marketing and distribution costs – if that is indeed what they are talking about in today’s filing.
And EuropaCorp, in a rare un-redacted part of today’s filing, also is worried that the $250 million Stalking Horse bidder for Relativity or whoever buys the company “may have no cash left on hand after the payment of closing obligations.” It adds, “Moreover, the Stalking Horse Purchaser’s adequate assurance of future performance materials provide absolutely no information regarding the infrastructure or identity or qualifications of any employees of the Stalking Horse Purchaser or of entities or rights in entities to be purchased from the Debtors.” Simply put – we thought we were making a deal with people who know what they’re doing in the industry, not whoever shows up with enough dough.
As to why this last-minute filing is so redacted and wants to be under seal … well EuropaCorp’s lawyers Ron Silverman and Christopher Bryant of NYC firm Hogan Lovells US LLP lay it out pretty clearly in accompanying paperwork also filed Tuesday evening Eastern time. “Each EC Agreement contains a confidentiality provision which, subject to certain exceptions, restricts EC from disclosing the existence or terms of such agreement,” reads the motion seeking an order to file EuropaCorp’s objection under seal. “In addition, the film distribution industry is highly competitive and film licensing and production agreements such as the EC Agreements are highly coveted. The information contained within the EC Agreements is commercially sensitive, proprietary and confidential. If this information was publicly disclosed it could negatively affect EC’s ability to negotiate similar agreements in the future.”
Relativity had no response to EuropaCorp’s filing when contacted by Deadline today. However, in filings of its own on Tuesday, Relativity also is looking for relief from its leases on Maple Drive, where it has six offices, and the Daimler-Benz auto lease. In terms of the latter, apparently no one is using the car, it states in the filing, and the company is in the process of surrendering it to the dealership after lease payments were missed over the past two months. The Maple Drive office leases were signed in 2012 and run through September 2018 — spaces the Chapter 11-seeking company says is just can’t justify and doesn’t need.