German company declares itself bankrupt
German film giant Internationalmedia declared bankruptcy Tuesday, blaming its problems in part on the money woes of financier David Bergstein.
Bergstein strongly denied having any part in Internationalmedia’s downfall, pointing to financial troubles the company incurred a few years before he became involved with it.
Internationalmedia told a Munich court that “pending illiquidity” has put “continued business operations at risk.”
Internationalmedia attributed this lack of liquidity to Eluvium Holdings, a German company that Internationalmedia says is linked to Bergstein, co-head of the Capco Group, which had failed to provide Internationalmedia with overdue capital.
The confusion about Bergstein’s involvement dates back to January, when Internationalmedia announced in a press release that a “strategic group of investors around David Bergstein” had taken a stake in the company, without specifying Bergstein’s role.
Bergstein denies that he was part of the group, saying he merely made the introductions. That investor group morphed into a company dubbed Eluvium.
Bergstein, already the target of disgruntled creditors in the U.S. as a result of ThinkFilm’s stumbles, told Daily Variety that he has “no involvement with Eluvium, none whatsoever.” He accused Internationalmedia of issuing fraudulent financial statements that misled investors.
However, Eluvium shares a Santa Monica address with Bergstein’s Capitol Films.
“Internationalmedia posted a positive capital account when in fact they had a negative capital account,” Bergstein said in a lengthy statement. “They’ve had negative cash flow for two years. They had a negative balance sheet but kept the full extent of their liabilities from the public.”
The Internationalmedia bankruptcy comes a week after CEO Konstantin Thoeren ankled the group, the parent company of the L.A.- and London-based Intermedia companies.
Internationalmedia alleges Eluvium exercised a series of options to continually increase its stake in Internationalmedia but failed to pay for some of the acquisitions. Eluvium made initial payments totaling some $5.1 million; the rest remains outstanding.
In addition, Eluvium’s acquisitions left it with more than a 30% stake in Internationalmedia, forcing it by German law to make an offer to minority shareholders for the remaining shares, something Eluvium has not done.
On top of that, Thoeren’s exit last week left the group without a managing director to oversee operations at its subsidiaries, Intermedia Film Equities USA in L.A. and Intermedia Film Equities in London.
“Our libraries are with Intermedia in Los Angeles and Intermedia in London. With our liquidity problem, we have not been able to replace Mr. Thoeren and currently have no one to manage the company,” Sascha R. Prestel, Internationalmedia’s chief financial officer and the only remaining member of its management board, told Daily Variety. “The future of the company is now in the hands of the insolvency administrator.”
Internationalmedia was hit hard last year by the cancellation of Jan De Bont’s “Stopping Power,” an action pic that was set to star John Cusack and shoot in Berlin but was abruptly shut down after financing fell through.
The production was taken over by L.A.-based R Media, another company linked to Bergstein.
In July, Cusack sued Internationalmedia for $5.6 million for unpaid wages; the company dismissed the claim, saying R Media was now liable for the entire production.
The embattled Bergstein, whose group includes Capitol Films and ThinkFilm, is plagued by financial problems that have led to lawsuits, unpaid bills, layoffs and film production shutdowns.
Bergstein acknowledged lending Internationalmedia $10 million, which he says the company still owes him.
Bergstein said Internationalmedia also owed $22 million from a loan received from the Octave-1 Funds, aka Octagon, a fund managed by New York-based Octagon Asset Management.
However, Internationalmedia issued a press release on March 26 saying that the IM Senior Dept. was taking over Octagon’s debt. The release said IM Senior was owned by Bergstein.
As to what he expected from the Internationalmedia insolvency, Bergstein said, “Octagon and I will end up with the libraries.”
Long before getting involved with Bergstein, Internationalmedia suffered a string of problems dating back to 2005, when the German government stamped out tax-sheltering film funds. Those once-popular investment schemes financed some of Intermedia’s biggest productions, including “Terminator 3: Rise of the Machines,” “Alexander” and “The Aviator.”