This is the long-awaited next step in Relativity Media’s effort to emerge from Chapter 11 bankruptcy protection. Today studio presented its reorganization plan (read it here) to the U.S. Bankruptcy Court, saying that it expects to relaunch itself with $60 million in debt, $100 million in new equity — and a plan to release seven films, over 18 months beginning in January, with a new revolving $250 million loan.
“As is often the case in complex chapter 11 cases, the plan may evolve as the parties refine negotiations,” the company said as a qualifier. Jim Cantelupe, of Summit Trail Advisors, will help raise the $100 million in equity, with funds to be put into escrow by the end of this year, Relativity says.
The plan needs Bankruptcy Court Judge Michael Wiles’ approval before it can take effect. Relativity’s filing warns that if the plan is rejected then “there can be no assurance that the Chapter 11 Cases will continue rather than be converted to chapter 7 liquidation cases, or that any alternative plan of reorganization would be on terms as favorable to Holders of Claims as the terms of the Plan.”
For Hollywood, the biggest news of this work-in-progress reorg plan may be that Relativity says it can raise the money to release seven films including the long on the shelf Masterminds and the Halle Berry starrer Kidnap. The company promises that before mid-2017 it plans to release not just the Zach Galifianakis and Kristen Wiig starring Masterminds and Kidnap, both of which had been under a legal cloud as a result of the Chapter 11 at one point, but also Before I Wake with Kate Bosworth, the DJ Caruso helmed The Disappointments Room, Shot Caller, Secret Scripture and the Anthony Hopkins and Colin Farrell serial killer pic Solace.
In addition, Relativity claims it has over two dozen new projects in the pipeline ready to move ahead – again, if the reorg plan is approved. Although Relativity gave its TV unit to senior creditors in exchange for $125 million in debt back in September, the film company that Ryan Kavanaugh still runs intends to develop as many as two scripted shows per year based on its films and digital content.
Today’s reorganization plan filing comes six days after Relativity struck a peace deal with Neal Moritz over the strongly contested Hunter Killer pic. The Fast & Furious producer had taken to the courts to grab the full rights to the Gerard Butler thriller based the novel Firing Point by George Wallace and Donald Keith. Moritz had called the Relativity Chapter 11 reorg a sham and a pretense to liquidation to profit hedge fund backers. On November 12, with a hearing on the matter and more looking, the two sides reached a new agreement that brought Millennium Films on board as a co-financer of the film, which is now set to start production next spring.
Relativity told the court that it will present financial statements, including a prospective look at the post-reorganization numbers.But it seems to anticipate that creditors may want additional information: A proposed order asks Wiles to rule that the reorganization filing “contains more than
sufficient information for parties in interest to make an informed judgment about the Plan.”
The proposal does not say how much of the equity Kavanaugh and others will hold, or who will sit on the board, after Relativity emerges from bankruptcy.