You will be redirected back to your article in seconds

Judge grants request to turn operations over

A federal bankruptcy judge turned the operations of Cannon Pictures Inc. over to an interim trustee, in part because one of the new controlling shareholders of the indie is a convicted felon.

After a 90-minute hearing Monday, Judge Lisa Hill Fenning granted an emergency request by eight creditors, including Charles Bronson’s production company, to appoint a trustee. Fenning, though, made the measure brief, agreeing to revisit the issue with another hearing in 10 days.

“I’ve heard very, very serious allegations here,” Fenning said. “I think the property is at risk.”

Sources said that John Hyde, the MCEG Sterling CEO who has been frequently appointed by the U.S. Trustee to run failing entertainment companies, would be appointed interim trustee at Cannon today.

Credit Lyonnais Bank Nederland, owed roughly $ 15 million by Cannon, and the Directors, Writers and Screen Actors Guilds, owed about $ 400,000, joined the creditors in seeking a trustee. Warner Bros. Home Video, owed roughly $ 10 million, had sought a less stringent remedy, seeking to turn control of Cannon over to a company officer and force him to report transactions to the court.

The creditors’ primary concern was that Gilbert Federbush, who owns 50% of the company that recently took control of Cannon, was convicted on six counts of mail and wire fraud in 1980 for establishing a bank that issued worthless checks. The creditors’ suit lists a handful of other businesses Federbush has been associated with that filed for bankruptcy protection or went into receivership.

History lesson

Stephen Chrystie, the lawyer representing the creditors, said Federbush’s history suggests he would pilfer Cannon.

“It is a dead certainty that these assets will disappear when in the hands of a convicted felon, who makes a business of looting companies,” Chrystie said.

Those assets total roughly $ 80 million — including Cannon’s Wilshire Blvd. building and its film negatives, among other items. The company also has nine pix completed that could be distributed in the U.S. if the company gets a capital infusion.

For its part, Cannon said appointing a trustee, even for only 10 days, could devastate its business. The perception that the company needs an outsider to handle its affairs is enough to scare away possible business and certainly put a crimp in its ability to raise money.

“This precipitous action is going to ruin this company,” said Edward Coleman, Cannon’s lawyer. “It’s going to ruin any chances this company may have.”

And Coleman disputed charges that Federbush would plunder Cannon. Rather, he said, Federbush is the only person who is willing to pump money into the indie to restore its health.

“Mr. Federbush does not have his finger in the pot here,” Coleman said. “What he does have is the willingness to invest in this company to get it out of its financial glitch.”

‘Good faith efforts’

Through Jack Fiman, Cannon’s chief operating officer, Federbush said he is “willing to put forth any good faith efforts” to straighten out the legal snarl, including putting his stock in escrow and giving up the voting power that comes with it.

More Biz

  • Alan Horn Bill Tanner

    Alan Horn to Keynote Variety Business Managers Elite Breakfast, Bill Tanner to Be Honored

    Bill Tanner will be recognized with Variety’s 2019 Business Managers Elite Award at the annual Business Managers Elite Breakfast presented by City National Bank, which takes place in Beverly Hills on Nov. 13. Co-chairman and chief creative officer of The Walt Disney Studios Alan Horn will be the keynote speaker in conversation with Variety editor-in-chief, [...]

  • Smoke haze covers the Sydney Harbour

    Australia's Seven West to Merge With Affiliate Prime Media

    Australia’s Seven West Media has agreed a deal to acquire regional broadcast group Prime Media. The move is a further step in the consolidation of Australia’s traditional media industry. The two companies announced on Friday that Seven will make the acquisition entirely through the issue of new shares to the owners of Prime. Both companies [...]

  • Ron Meyer

    Ron Meyer Files $10 Million Suit Over Forged Rothko

    NBCUniversal Vice Chairman Ron Meyer has filed a $10 million suit against two art dealers, claiming they sold him a forged Mark Rothko painting in 2001. Meyer accuses Susan Seidel and Jaime Frankfort of duping him into buying the work. According to the suit, he was told that it would be included in an official [...]

  • Former movie producer Harvey Weinstein (L)

    Harvey Weinstein Seeks to Call Expert on 'Recovered' Memories at Rape Trial

    Harvey Weinstein’s attorneys are seeking to call an expert on “recovered memories” at his trial on rape and sexual assault charges. The defense has filed a motion asking to call Deborah Davis, a psychologist and professor at the University of Nevada at Reno. Davis is a frequent defense witness. She co-authored an article in 2006 [...]

  • Tekashi 6ix9ine Docuseries Coming From Showtime

    Tekashi 6ix9ine Docuseries Coming From Showtime and Rolling Stone

    Showtime Documentary Films today announced a new limited docuseries profiling controversial rapper Tekashi 6ix9ine. Titled “SuperVillain” and inspired by the Rolling Stone feature written by Stephen Witt, the three-part series will trace how a New York City deli clerk named Daniel Hernandez became superstar rapper Tekashi 6ix9ine — who racked up 2.6 billion streams and [...]

  • Fader Label Logo

    Fader Label Signs Two New Acts, Boosts Staff

    The Fader Label, home to Clairo, Matt and Kim and others, announced two new signings today along with three new hires on its staff. Charlie Burg and Zachary Knowles have joined the label’s talent roster, while Carson Oberg has come aboard as general manager, Yasmine Panah as project manager and Josh Hymowitz as label coordinator. They [...]

More From Our Brands

Access exclusive content