EXCLUSIVE: As we step foot on the ground at the Sundance Film Festival today, we’ve confirmed that 12 people of the near 30-person staff at Aviron Pictures were pinkslipped on Friday and issued their final paychecks. Domestic theatrical distribution president Greg Forston and his team were eliminated, in addition to EVP Publicity and Promotion Claire Heath.
This melee comes in the wake of BlackRock, Aviron’s senior lender, alleging impropriety in the company’s structure in a contentious lawsuit that was filed December 17 in the Supreme Court of New York (read it here), specifically accusing the company’s founder and owner William Sadleir of forgery and fraud. This resulted in Sadleir being removed by BlackRock as the operating manager of his company’s subsidiary Aviron Pictures as well as other arms of his company.
William Sadleir Out At Aviron Pictures
At this point in time sources inform us that Sadleir is prepping a defense, and counter-claims against these accusations.
In Sadleir’s place at Aviron Pictures, I’m told that BlackRock installed an independent manager who will attempt to correct the distributor’s wrongs. That is John Farrace of SierraConstellation partners, a firm that’s involved in company reorganizations and assesses what the next step will be in these turbulent financial situations. I hear that there are some key Aviron executives who survived Friday’s layoffs including President David Dinerstein, EVP Acquisitions Jason Resnick, Head of Business Affairs Louis Spoto and EVP Media Strategy and Content Distribution Francois Martin — who are working with Farrace on hopes of a renewed business model.
Aviron insiders provided no comment when reached about this story.
It is not clear whether Aviron’s unreleased titles will be auctioned, whether Chapter 11 will be filed or if a new company will be spawned with the same management team. We’ll see how this all plays out.
Sadleir told us on the record in an email dated Jan. 8 regarding his removal from Aviron Pictures by BlackRock: “I am in the process of closing a substantial financing that will allow Aviron (or at least most of its management team, possibly under a new banner) to continue as an independent domestic producer and global distributor of feature-length commercial films, without any further reliance on BlackRock as its only capital source.” The hope here is to continue to supply big exhibition with mid-budget movies targeted at specific demos. Sadleir also informed us earlier this month that while he was replaced as the head of Aviron Pictures, he remains the owner of the umbrella company Aviron Group through a family trust. Also, Sadleir says he remains the Manager of Aviron Finance and Aviron Licensing.
We had also been hearing for some time that BlackRock was looking to get out of the independent film space and to focus more within the mergers and acquisitions sphere of the entertainment industry.
For those not in the know, Tomas Jegeus — the former 20th Century Fox Co-President of Global Theatrical Marketing & Distribution who was named CEO in July — left the post on November 6 and filed a suit (read it here) on January 13 against Aviron Pictures and Sadleir claiming that the latter “had not paid Jegeus one penny of his $250,000 signing bonus or his ($1M annual) regular salary.”
Jegeus’ plan was to expand Aviron into streaming and foreign distribution as well original content productions, so that the distrib could reap monies it was leaving on the table.
I hear that Aviron staff and key brass were blindsided and shocked by the claims made in BlackRock’s lawsuit and weren’t privy to such alleged misdeeds. At the same time, there’s great upset having been made grand promises of capitalization (which the Jegeus suit details).
Aviron began with great intentions of becoming another distributor of mid-budget fare like Annapurna, STX and Lionsgate. Its first title out of the gate in the summer 2017 was solid –the Halle Berry thriller Kidnap, which made close to $31M at the domestic box office, a title that Aviron saved from Relativity’s bonfire.
Prior to Kidnap, Aviron was being tapped by Byron Allen’s Entertainment Studios to handle the marketing campaign on his Mandy Moore shark movie 47 Meters Down, which was a big hit for him, earning $44.3M (Allen saved that movie’s theatrical fate from the Weinstein Co. which was set to dump it straight to video). Confidence was high for about two years that an under-30-person staff at Aviron could tackle 2,500- to 3,000-screen wide releases and be competitive. Another profitable pic for Aviron was the 2018 horror sequel Strangers: Prey at Night, which made over $24.5M.
However last year at Sundance, the writing was on the wall for this young film distribution studio of independent and wide releases after it reneged on the promised P&A spend for the Anne Hathaway–Matthew McConaughey movie Serenity, which tanked stateside with $8.5M. This largely was because the company was under-capitalized, but Aviron issued a statement saying that it had to curb its marketing spend due to the pic’s poor test scores and critical reaction (Serenity logged a 20% Rotten Tomatoes score).
Further calamity ensued last spring when those close to the production of After — a feature adaptation of the popular Anna Todd YA novel that Aviron released — were upset over the distributor not marketing the film stateside, with a lackluster $12.1M domestic result, despite raking in an overseas gross of $57.4M. After Productions sued Aviron, claiming that the distributor failed to market the movie stateside after foreign distributors made the project work. The production company also claimed that it wasn’t paid the remaining balance on its $3.15 million minimum guarantee.
Another 856-theater losing release for Aviron was A Private War, the Rosamund Pike drama about war correspondent Marie Colvin, who covered civil wars in some of the world’s most dangerous countries. The movie earned two Golden Globe noms — for Pike’s performance and a best song nom for Annie Lennox’s single “Requiem for a Private War,” but the pic crashed at the domestic B.O., making only $1.6M.
Some highlights of the BlackRock suit accuse Aviron Entities of “purporting to sell or otherwise finance several of the motion picture rights or related receivables that were pledged as collateral to the BlackRock Fund. BlackRock never authorized or consented to these filings, nor authorized or consented to these recent sales of collateral.”
BlackRock’s counsel contacted Aviron’s attorneys, who “provided five such documents of alleged filings which the plaintiff calls ‘Fraudulent Releases. … These documents are forgeries. It appears that Sadleir, the Aviron Entities’ officers or employees, and/or their agents copied and pasted signature pages from prior agreements among the parties onto these documents to create the appearance that the Fund approved the Fraudulent Releases.”
The suit goes on to read, “In a recent phone call with the Fund’s advisers, Sadleir confirmed as much, saying that he ‘f—-d up’ and had effectuated the Fraudulent Amendments by recycling signature pages from prior transactions with the Fund on the Fraudulent Releases — a remarkable admission of fraud.
“The Fund’s recent investigation suggests that Sadleir resorted to fraud for his own self-serving ends,” the suit adds. “In connection with a separate litigation alleging fraud against Sadleir, it appears that Sadleir agreed to a $2.7 million judgment against himself on July 15, 2019, the same day that many of the Fraudulent Amendments were filed with the Delaware Secretary of State.”
Jegeus’ complaint reads that while working as the CEO for Aviron, he was “misled about the financial state of the company” and that “Sadleir had already received ‘separate, competitive funding offers from HPS and Whitehorse Capital,’ that a ‘wealth manager at Alex Brown, & Sons is also preparing a similar funding.’ He claimed that all of these investors were on board for at least the next five years.” In addition, Jegeus claims “he had learned additional details about Aviron’s finances that raised serious red flags about the company, including that Aviron was carrying large amounts of debt (making it next to impossible to secure additional funding) and that Sadleir was using seemingly fabricated assets to entice new investors” as well as “Aviron’s credit facility with BlackRock was almost completely tapped out.”
The complaint continues: “Aviron took the preposterous position that Jegeus was never really employed by Aviron at all. Rather, Aviron now claims that Jegeus’s employment had always been conditioned on (1) Aviron securing new funding with Jegeus’s assistance, (2) BlackRock approving Jegeus as CEO, and (3) the parties’ decision to move forward after a ’90-day mutual trial employment period.’ Aviron further contends that, despite his months of work for the company, Jegeus is entitled to no compensation or Severance Benefits.”
In sum in Jegeus’ suit, “Aviron’s material breaches of the Agreements have denied Plaintiff the benefit of their bargain and have proximately caused damages to Plaintiff. The exact amount of these damages will be proven, but they are in excess of $2,250,000.”
Coming away from Aviron’s woes, it’s mid-budget and independent movies that are the collateral damage here as distributors of such fare scratch to stay alive in a haves-and-have-nots marketplace dominated by major studio IP at the box office, and streamers that, while saving such movies, largely relegate these titles to mobile phones and in-home viewing.
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