UPDATED 1:13 PM: EXCLUSIVE: Aspects of Relativity’s first bankruptcy are still before the courts, but as expected the company today filed for Chapter 11 with a promise that “funds will be available for distribution” to its approximately 200 unsecured creditors.
As Deadline laid out in our exclusive this morning on the once high-flying Ryan Kavanaugh-run company’s intention to sell its assets to a New York investor group, the voluntary bankruptcy petition is intended to pave the way for new owners UltraV to take over later this year
After all the drama, huffing and puffing of Relativity’s crash in 2015 and subsequent battles with Netflix and others, the 10-page filing made Thursday in U.S. Bankruptcy Court for the Southern District of New York was a relatively low-key affair. However, the paperwork (read it here) did reveal that Relativity Media and Relativity Studios has between $10 million-$50 million in assets up against $500 million-$1 billion in estimated liabilities.
That prospect doesn’t seem to have deterred the deep pockets behind UltraV, who hope an existing distribution deal with Netflix and the company’s library and relationships will help turn the lights back on. This being Relativity, be prepared to find out nothing is so straightforward.
PREVIOUSLY, 12:29 AM: Following one of the industry’s most involved sagas, we can reveal that Relativity Media has entered into an agreement to sell all of its assets to a New York investor group. Intended buyer UltraV Holdings LLC is a joint venture made up of funds managed by Sound Point Capital Management, a New York-based asset management firm with a reported $17 billion in assets under management, and RMRM Holdings. The fee was undisclosed.
RMRM is led by David Robbins, former chairman of Bally Technologies; Lex Miron, a veteran media industry advisor; and Larry Robbins, a seasoned media industry executive. The plan is for UltraV to inject enough capital into the damaged firm to get it back into development and distribution, including via what the new investors say is an ongoing deal with Netflix.
Relativity founder Ryan Kavanaugh is not expected to have anything to do with the company under the new owners. Netflix was unavailable for comment at time of posting.
The deal will need to come about through a section 363 sale and a Chapter 11 bankruptcy filing. Relativity Media and “certain of its subsidiaries” are expected to imminently file the Chapter 11 petitions in the U.S. Bankruptcy Court for the Southern District of New York. The sale will then be subject to court approval and other conditions but is expected to close in the next 45-60 days.
“We are very excited to acquire the assets of Relativity Media, and we believe there are numerous opportunities to reinvigorate and expand the business,” said Miron. “We have a strong development slate and are looking forward to bringing these films to audiences through our distribution partnerships, including through our agreement with Netflix. We are committed to putting the necessary resources into the business so that we can attract and retain new talent, create outstanding original film, television and digital content, and distribute that content across multiple platforms.”
“Our simple message to the industry is that Relativity Media is open for business and we look forward to demonstrating that we intend to operate a substantial and well financed entertainment company with strong and stable leadership,” said Robbins. “We recognize that Relativity Media has had its fair share of challenges during the past several years, and that we need to rebuild trust and confidence in the business. It is our full intention and commitment to put those past chapters behind us and resume the business of creating and distributing outstanding content. We are confident that we have the collective industry expertise, relationships and, perhaps most importantly, the financial resources to fulfill that commitment and build a successful and sustainable business.”
Kavanaugh added: “I still very much believe in the Relativity Media business model. Unfortunately, the company faced the significant challenge of a complicated capital structure and an evolving industry. I could not be more pleased about this agreement with UltraV. The transaction will result in a fresh start for the company, and it turns Relativity over to owners who have a sincere appreciation for the business, the art and the long-term needs of the industry.”
Robbins concluded, “UltraV will now be focused on completing the sale process as expeditiously as possible and ensuring that once the transaction is finalized Relativity Media can hit the ground running with appropriate financial backing and a strong leadership team.”
This would be some attempted comeback should it make. It’s the first we’ve heard from Relativity in a little while. Last year, the failed mini-studio, which has already been through the Chapter 11 process, spent time in court trying to convince judges of potential investors and getting into skirmishes with Netflix. Last month, a New York judge dismissed a $110M lawsuit from a lender who claimed they were tricked into plowing money into the company as it was heading toward bankruptcy. It is not immediately clear which, if any, of the former Relativity movies could transition to the new entity and today’s announcement could potentially kick-start a new round of claims from creditors.
The once voracious company, which had a hand in a string of studio movies including American Gangster, Mamma Mia! and State of Play, also comprised sports, education and music divisions. In 2015, the beleaguered outfit sought bankruptcy protection and an auction of the company, stating liabilities of up to $1 billion.
Subscribe to Deadline Breaking News Alerts and keep your inbox happy.