Relativity Media and CEO Ryan Kavanaugh either “have resolved, or are in the process of resolving, almost all of the remaining Objections,” to the company’s plan to exit Chapter 11 bankruptcy, the company says today in a filing to the U.S. Bankruptcy Court.
The document lays out the case that the studio will make Monday in a hearing where Judge Michael Wiles could decide to let Relativity operate once again independently, without court oversight and free of most of the commitments that it couldn’t fulfill when it filed for bankruptcy last summer.
Relativity says that “all but one” of its secured lenders support the plan, which also has the endorsement of the Creditors Committee, and others with about 85% of the company’s unsecured debt.
Those still objecting to Relativity’s plan include CIT Bank, Unifi Completion Guarantee Insurance Solutions, Colbeck Capital, Netflix, and VII Peaks. Some say that Relativity hasn’t provided sufficient detail about its funding, spending plans, the makeup of its board, and the people who will make day-to-day decisions.
Relativity says Kavanaugh and his partner, financier Joseph Nicholas, will be in charge of the company — and identified Managing Director Carol Genis and Chief Communications Officer David Shane as execs who will stay. Identities for other “retained officers,” as well as their compensation, “will be disclosed prior to the entry” of Wiles’ order approving the plan.
Relativity Says It Has Financing It Needs To Exit From Bankruptcy
As to whether the proposal is financially feasible — a key consideration for the court — Relativity says that it has “four completed but as-yet unreleased films, the value of which can be fully realized only through implementation of the Plan.” The studio also cites its agreement to pay an undisclosed amount for actor Kevin Spacey and Dana Brunetti’s Trigger Street Productions — and make them, respectively, Chairman and President of Relativity Studios.
“The Debtors anticipate significantly enhanced earning potential for their future films produced under the stewardship of these industry veterans,” the filing says.
They’ll be supported with a balance sheet with about $500 million. There’s also “ample reason to expect that the Debtors will be able to obtain additional equity and debt financing both in the short term following their emergence from chapter 11 and over the next several years.”
Netflix told the court that it wants out of its movie licensing agreement with Relativity, in part because it isn’t sure that the studio can hold up its end by delivering an undisclosed number of movies each year.
But Relativity says that it can meet that requirement either with its own films or by acquiring distribution rights from third parties. If it still falls short, the studio says, then Netflix’s “sole remedy” is a payment of $5 million for each film below the threshold.
Netflix also says that Relativity appears precariously dependent on the streaming service’s licensing payments — calling into question whether the plan is feasible.
Relativity responds that its failure to fulfill its film commitment last year doesn’t mean it can’t do so from now on. As a result, “there is no need to consider whether or not the Plan is feasible without Netflix.”
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