Netflix has joined the crowd of companies that do business with Relativity Media, and reserves the right to object to a sale to escape Chapter 11 bankruptcy protection. A group of creditors referred to as Stalking Horse bidders have offered $250 million in the auction, with bids due tomorrow.
The problem with these bidders is that there’s “no information on who will run the day-to-day operations or their qualifications, no indication that the buyer has any meaningful experience in the industry, no business plan, no budget, and nothing to provide assurance that the proposed capitalization is adequate or that more capital will be available if needed,” Netflix says in a court filing (read it here).
Viacom and A&E Networks are among the companies that have raised similar objections.
The streamer says that since 2010 it has paid Relativity “hundreds of millions” in license fees. But it’s “extremely unlikely” that the studio will live up to its agreement to deliver 15 theatrical films to Netflix this year.
At this point Netflix has only received four titles in 2015, all released in the first two months of the year: The Woman In Black 2, Angel Of Death, Black Or White, and The Lazarus Effect.
Meanwhile Relativity cancelled release dates for The Masterminds, The Disappointments Room, and Before I Wake.
“This gives rise to substantial doubts regarding whether the business will be able to release any more films theatrically this year, regardless of whether it is acquired by Stalking Horse or any other buyer,” Netflix says.
That’s “not a trivial matter,” the company adds. And while 2015 presents “the most pressing, and most problematic” issues, Netflix also “must be shown adequate assurance” that Stalking Horse can deliver in the future.
The company says it’s talking to the Stalking Horse creditors/bidders and “remains hopeful that they may lead to a resolution” if the creditors prevail in the auction.
For now, though, the rights to the deal with Netflix “simply cannot be assumed or assigned without Netflix’s consent, which it has not given,” the company says.