- Founder Kavanaugh says firm will be stronger, well capitalized
- Spacey, Trigger Street to oversee motion picture content
Relativity Media LLC won court approval to exit bankruptcy with a plan that will bring in actor Kevin Spacey to oversee motion picture content, a move one of the company’s lawyers described as a “game changer.”
U.S. Bankruptcy Judge Michael Wiles in Manhattan Tuesday approved the movie company’s request to confirm its plan, after a two-day hearing that delved into objections from creditors including CIT Bank and Netflix Inc. Wiles said he would require further details, including regarding Spacey’s contract, before the plan can take effect.
The ruling paves the way for the company to exit a high-profile bankruptcy that attracted scrutiny to founder Ryan Kavanaugh and shows that the bankruptcy process can even be used to rescue a business that depends on the most nebulous of assets: talent.
“Today we achieved an important milestone in Relativity’s path to emerging from Chapter 11 as a stronger, well-capitalized media company that is well positioned for growth and success,” Kavanaugh said Tuesday in an e-mailed statement.
Relativity lawyer Richard Wynne said Monday that the company has negotiated a deal with Spacey, the Oscar-winning actor, and Dana Brunetti’s production company, Trigger Street. He told the judge the pair would oversee all motion picture content for the reorganized company, giving them authority to select projects for development.
“On the creative side, assuming that we conclude everything and Spacey and Brunetti join the company, it will be a game changer for the company,” Wynne said.
But Wiles was also told that a deal with CIT Bank, an agent to production loans, had yet to be completed even as the plan confirmation hearing began. Lawyers for Netflix also questioned the plan, citing fundamental changes in management, financing and ownership of the company.
“What is the nature of Spacey and Brunetti’s ownership? It’s not clear and may not yet be negotiated,” Netflix lawyer Scott McNutt said in court Monday. Spacey, stars in “House of Cards,” the Trigger Street-produced dramatic series about Washington politics that streams on Netflix.
The reorganization hinges on several unreleased movies, including some related to CIT’s liens. Titles including “Masterminds” and “The Disappointments Room,” as well as “Kidnap,” “Before I Wake,” “Shot Caller” and “Solace,” are to open over several months and have been factored into Relativity’s financial projections, according to court testimony.
While in bankruptcy, Relativity encountered difficulty selling itself after artists’ guilds, Viacom Inc. and A&E Television Networks raised objections. Debate during the reorganization was often acrimonious, with one creditor calling the company a “sham.”
CIT had earlier objected to the reorganization, saying that there wasn’t enough detail about how the company would finance its exit from court protection.
The case is Relativity Fashion LLC, 15-11989, U.S. Bankruptcy Court, Southern District of New York (Manhattan).