The mini-mogul behind Relativity Media said he’d change Hollywood, now studio … | News Entertainment

The mini-mogul behind Relativity Media said he’d change Hollywood, now studio …

31 Jul 2015 | Author: | No comments yet »

Hollywood’s Relativity Media files for bankruptcy protection.

LOS ANGELES (AP) — Relativity Media, the struggling “mini major” Hollywood studio behind movies such as “Immortals” and “Mirror Mirror,” has filed for Chapter 11 bankruptcy protection.

The company owes more than $300 million to creditors and the filing comes after a spate of lawsuits between it and an entity called RKA that had lent it money to market movies. Relativity Sports, Relativity EuropaCorp Distribution (the film marketing and distribution joint venture between Relativity and EuropaCorp, USA) and Relativity Education were among those not included in the filing. Along with the filing, Relativity says it has received a commitment for $45 million in debtor-in-possession financing provided by a group of unnamed lenders. “Relativity continues to pursue its mission as a next-generation global media company, and we remain firmly committed to our film and television businesses,” Kavanaugh said in a statement. “The actions we are announcing today will protect our valuable franchise and allow us to emerge as a stronger, more focused company. Our board and management team explored a variety of options to refinance Relativity’s debt, and we ultimately determined that the protection afforded by a court-supervised reorganization process will provide additional time and structure to achieve our financial and strategic objectives.” The move comes after Relativity spent months searching for a new lender only to have subordinated debt-holders, led by Anchorage Capital, kick up a fury and one film financier stampede into court with claims of fraudulent mismanagement. Kavanaugh, producer of such film and TV shows such as Bradley Cooper’s “Limitless” and MTV’s “Catfish,” has been desperately trying to find new investors or loans to fill a $320 million debt obligation.

The bankruptcy, being handled by the Sheppard Mullin law firm, is quite literally a new chapter for a closely-watched studio that surfed a wave of Wall Street money before the recession hit and also brought a quantitative approach towards movie-making. Backed by New York-based hedge fund Elliott Management, Relativity poured more than $1 billion into the two studios, co-financing such films as Fast & Furious 6, Bridesmaids, Salt and The Social Network. According to real estate documents, the Relativity CEO also owns a home in Westlake Village, which he and his wife Jessica Roffey bought in 2010 for $1 million, as well as several condo units in Maui and New York City. Ultimately, this could be the company’s undoing, and bankruptcy documents in coming months could reveal more about the well-connected company including its deals and high-profile, large-living executives. But Anchorage then exercised its right to buy out Catalyst’s stake in the secured debt, thereby allowing Catalyst an out from its equity commitment.

Sony terminated Relativity’s deal for U.S. rights to The Bronze, produced by the Duplass brothers, while other high-profile projects including Autobahn, Zach Galifianakis comedy Masterminds and Halle Berry action film Kidnap have been left hanging in the balance. All litigation against the company is automatically paused, and while employees will continue to see wages, the bankruptcy process raises uncertainties and pushes by creditors that could impact its deal-making.

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