French bank Credit Lyonnais and the three Hollywood guilds have joined forces to hasten foreclosure on bankrupt Hemdale Film Corp.
United they stand to recoup some of the $ 98.5 million they are collectively owed. Divided they could have wound up in lawsuits over who gets paid first.
With bankruptcy proceedings burning up $ 150,000 a month and a maximum $ 40 million to be recouped from Hemdale’s assets, the bank and guilds inked a pact under which they will share whatever they can recover, sources said. Percentages weren’t disclosed, but the bank forgives unsecured credit as part of the deal.
Hemdale, now known as NSB Corp., was forced into an involuntary Chapter 7 bankruptcy by creditors last September. That was converted to a Chapter 11 reorganization in October (Daily Variety, Oct. 6, 1992).
Convinced a reorganization is hopeless, the guilds inked an inter-creditor agreement “as to how the proceeds of the foreclosure would be divided up,” said attorney Jay Roth of Taylor, Roth, Bush & Geffner, which represents the Writers Guild of America, the Screen Actors Guild and the Directors Guild of America.
The agreement involving only the guilds, Roth said, converts their collective $ 8.5 million debt into secured credit.
The $ 4.5 million-plus owed SAG was secured. The $ 4 million collectively owed the directors and writers guilds was unsecured.
The bank and guilds on Tuesday resigned from the official unsecured creditors committee, leaving unsecured creditors with no allies.
“I think the reason for the resignations is because they do not want to turn over a secret agreement between (the bank) and the three guilds,” said attorney Steve Chrystie, who heads the unsecured creditors committee.
The next step for the secured creditors is to get approval from the bankruptcy judge to foreclose.
“Both the guilds and Credit Lyonnais have resigned from the unsecured creditors committee in the Hemdale bankruptcy in order to file a motion to be allowed to foreclose on the Hemdale library. That’s the bottom line,” said CL attorney Phil Grosz of Loeb & Loeb. “It is important to seek the value of the assets sooner rather than later.”
The 150-title library includes “Hoosiers,””Platoon,””The Last Emperor” and “Terminator.”
The bankruptcy does not involve the new Hemdale Entertainment. However, its subsid Hemdale Home Video, which has rereleased “Terminator,” recently had all video rights “terminated,” according to Grosz.
“Hemdale Home Video was allowed under a license with the old Hemdale to distribute into video some of the old titles,” Grosz explained. “That has recently been terminated by John Hyde,” the court-appointed manager of Hemdale Film Corp. Hyde did not return calls.
Hemdale attorney Dan Girard of Lieff, Cabraser & Heinmann noted the new pact between secured creditors does not affect NSB’s pending lawsuit charging the bank with fraud and racketeering (Daily Variety, March 26).