Capco Group to announce new Euro sales arm

The topper of Capitol Films and ThinkFilm maintains that his companies are firmly on track, but there are growing rumblings Stateside about unpaid bills and lawsuits.

David Bergstein, the head of the Capco Group, will be staying on a yacht called Pegasus at Cannes. He told Daily Variety Capco plans to announce a new Euro sales arm at the fest, where it is peddling pics including “The Edge of Love,” “Incendiary” and “The Last Word” and ThinkFilm prexy Mark Urman will be looking for potential acquisitions.

Bergstein blamed a bridge financier for last week’s shutdown of “Nailed” and said that Capitol, which has already invested $12 million in the project, has found another bridge financier to ensure its well being.

However, it’s far from smooth sailing for Capco on the home front: Daily Variety has learned of several new lawsuits brewing against Bergstein and his production entities for unpaid loans and failure to pay for services rendered.

Last Thursday, the day before SAG shut down “Nailed,” Alexander Sandel filed suit against Bergstein and five affiliated production entities in L.A. Superior Court. The lawsuit outlines a series of loans totaling more than $4.5 million by Sandel, who used to run a DVD replication facility called Future Media Prods., to Bergstein and his entities beginning in early 2005. With interest, Bergstein owes Sandel more than $6.5 million, the lawsuit says.

It further accuses Bergstein of fraud and having victimized many lenders and investors including a former attorney.

Vendors and filmmakers, some of whom have been having a difficult time getting paid since last fall, are also resorting to legal action as their hopes fade for payment. A few weeks ago, a vendor sued ThinkFilm for more than $100,000 owed for services dating back to last summer, and other vendors are also said to be preparing similar action. Alex Gibney, who wrote, directed and produced “Taxi to the Dark Side” for ThinkFilm, only recently got paid for his Oscar winning docu after lawyers threatened to take ThinkFilm into bankruptcy.

Vendors and filmmakers began comparing notes early this year on the awards circuit; more lawsuits are expected. ThinkFilm is also known to owe media outlets substantial amounts of coin.

Its execs have apparently been blaming payment delays to Bergstein’s decision to consolidate Capitol’s London office and ThinkFilm’s Toronto outpost to L.A., where he is based. Bergstein casts some of these delays as a byproduct of ThinkFilm’s earlier financial woes.

“I come from a distressed asset background not the film business,” Bergstein said. “When you’re dealing with any distressed asset, whether it’s a single film or a company, it takes you the first year just to straighten out those issues. You can’t have problems for five years and expect them to go away in five minutes.”

However, the vendor suing ThinkFilm said it had always paid its bills in the past — eventually.

Bergstein acquired ThinkFilm and Capitol in 2006, and attempted to purchase homevid specialist Image Entertainment in March 2007. That deal ultimately fell apart after several delays, resulting in lawsuits on both sides.

He said the consolidation was always part of the plan, noting that little of ThinkFilm’s coin came from Canada and the cost of doing business is ridiculous for a U.S.-based company.

“We’re not developing European movies. We’re developing U.S. movies,” Bergstein said. “By moving the core business to Los Angeles, we’ve reduced our overhead by 60%. When we acquired Capitol, the office in Los Angeles had 3 people. Today we have a total 40 employees.”

Bergstein claims that SAG’s shut-down of “Nailed” had less to do with a lack of coin than the fact that the project’s bridge financier, the Footprint Film Fund, defaulted on its payment after principal photography began.

That move put him in conflict with SAG over the subordination of the debt financing.

“We had fully escrowed the salary of the two leads and left significant deposits with SAG. This dispute was something beyond money. It was to do with the structure of the financing.”

Production has since resumed on the David O. Russell political comedy, which stars Jake Gyllenhaal and Jessica Biel. Capitol hopes that “Mary, Queen of Scots,” starring Scarlett Johansson, finally will go into production this summer after a number of delays, but helmer Phillip Noyce has withdrawn from the project. Capitol is also coping from brain drain: A clutch of key execs have ankled in the past few weeks, including co-managing director Nick Hill, sales director Sofia Neves and development head Ed Clarke.

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