- Studio calls the claim a pressure tactic to grab film rights
- CIT says bankrupt company could run out of cash by 2016
Ryan Kavanaugh’s Relativity Media has struggled to hold onto top talent as it reorganizes in bankruptcy. Now it’s engaged in a battle over its reputation with a group of filmmakers behind the stalled “Hunter Killer” feature who say the company is a “sham” with no hopes of recovering.
“Hunter Killer” is an action thriller in development with Neal Moritz’s production company Original Film. According to IMDb.com, the movie will feature Gerard Butler, Billy Bob Thornton and Common. Martin Campbell, whose credits include “Casino Royale,” is to direct. The plot involves an untested U.S. submarine captain on a mission to rescue the Russian president.
For Relativity, however, the crucial mission is to rescue itself.
After selling its television assets in October, Relativity set out to restructure the movie business on its own. It asked a Manhattan bankruptcy judge to extend its exclusive right to file a reorganization plan by 120 days, until March 26. It also wants until May 25 to drum up creditor support for a plan.
Moritz and others affiliated with “Hunter Killer” objected to the exclusivity extension in court papers filed Thursday.
Kavanaugh, Relativity’s chief executive officer, has been “proliferating false, misleading statements and omissions of material facts that have the effect of defrauding investors and counter-parties to executory contracts,” the “Hunter Killer” parties said in court papers. They said the entire leadership of the film division has left and the Beverly Hills, California-based company can’t be reorganized into a viable movie studio.
Relativity rejected the allegations.
“This is nothing more than a desperate producer’s attempt to use the media to pressure Relativity Studios into giving up its lawful rights to ‘Hunter Killer,’” the company said in a statement, calling the claims “baseless and entirely without merit.”
In a subsequent statement, the company said the film, as with all Relativity movie projects after 2012, was “run and overseen by Relativity Studios’ production leadership. Any claim to the contrary that Kavanaugh was involved in anything improper is patently false.”
Representatives of Butler, Moritz, Common and Thornton had no immediate comment.
Moritz has been a producer on some of Hollywood’s biggest hits, including “Furious 7” and other films in the car-chase franchise, as well as the comedies “21 Jump Street” and “22 Jump Street.” He’s now producing further Furious and Jump Street sequels.
CIT Bank NA, an agent to production loans, also balked at the extension bid. It said Relativity’s latest budget indicates the studio could run out of cash by the last week of 2015 if it doesn’t get additional financing. The company’s operating loan matures Jan. 31, 2016, CIT said.
The “Hunter Killer” parties said the only motive for keeping the company alive is to benefit investors.
Relativity would have to liquidate if hedge funds that lost money on the studio before its bankruptcy weren’t trying to “prop up this charade” long enough to allow them to trade in their old debt for a stake in the reorganized company, the “Hunter Killer” group said.
Relativity filed for bankruptcy in July, proposing to auction its assets. In October, it won approval of a plan to sell its TV unit while leaving Kavanaugh to reorganize the rest of the company. Kavanaugh, 40, was joined in the deal to keep control by VII Peaks Capital LLC, an investment management firm based in Orinda, California, and OA3 LLC, a Los Angeles-based financial services firm.
The “Hunter Killer” parties said Relativity has no further assets to use as collateral because it has already pledged the rights to its films for loans to fund advertising, and misspent that money to cover prior losses.
A hearing on the exclusivity extension is set for Nov. 12.
The case is Relativity Fashion LLC, 15-11989, U.S. Bankruptcy Court, Southern District of New York (Manhattan).