A federal bankruptcy judge has ruled that an interim trustee will be appointed to oversee the assets of David Bergstein and THINKfilm, Franchise, Capitol and other companies he controls.
At a hearing on Tuesday, populated by representatives for more than two dozen creditors, Judge Barry Russell said that evidence was “overwhelming” for appointing the trustee, an unusual action in an involuntary bankruptcy proceeding.
Among the creditors are SAG, the DGA and the WGA, as well as guild pension and health plans, which claim that Bergstein’s companies have failed to pay residuals to their members and, in some cases, upfront salaries, on movies such as “Before the Devil Knows You’re Dead,” “Boondock Saints,” “The Whole Ten Yards” and “Bordertown.”
Attorneys for Bergstein and his companies did not return calls for comment. He was not present at Tuesday’s proceeding, nor was his business partner, Ron Tutor, but Bergstein has said in court declarations that his entities “are generally paying creditors as they come due.”
THINKfilm was responsible for releasing such acclaimed pics as “Taxi from the Dark Side,” “Half Nelson,” and “Murderball,” and when its troubles first gained significant attention in 2008, it seemed to foreshadow overall turbulence in the indie sector.
David Molner, the managing director of Screen Capital International, which is leading the action against Bergstein and his holdings along with Aramid Entertainment Fund, said in a statement, “I think the judge rightly recognized thatt an independent trustee is undeniably needed to sort through just what is going on inside these myriad, black-box companies and why so many creditors haven’t been paid. I can’t believe the fact pattern — or the general outlook — gets any better for Mr. Bergstein or his backer Ron Tutor as we begin taking discovery.”
Through his attorney, Stroock’s Daniel A. Rozansky, Molner is pursuing separate civil action against Bergstein and Tutor in connection with unpaid loans, and they are seeking a temporary restraining order in U.S. District Court to stop a planned foreclosure sale of Capitol Films’ “Black Water Transit,” starring Laurence Fishburne and directed by Tony Kaye.
A sale of Bergstein’s film libraries was halted earlier this month when the creditors filed an involuntary bankruptcy petition.
The guilds spell out money their members are owed in a series of filings they made in bankruptcy court last week. The Directors Guild of America, pointing to what it calls one of the more egregious examples, contends that Gregory Nava, the director of “Bordertown,” was never paid $450,000 of his initial compensation, plus interest and contribution to the guild’s health and pension plans, even though the DGA won a 2007 arbitration judgment against Bergstein’s companies. In a claim filed last year, the guild said that Taylor Hackford, who is the current DGA president, was still owed $237,500 of his $500,000 salary for directing the pic “Love Ranch,” in addition to interest and pension and health contributions.
The three guilds issued a statement after the hearing saying that they “welcome the judge’s appointment of a trustee in this situation. We will continue to keep a watchful eye on this matter and protect the interests of our members.”
Another hearing is scheduled for May 25.