UPDATED: Relativity Media has attempted to maintain an appearance of normalcy following its bankruptcy, claiming that it would stick with an early October release date for heist comedy “Masterminds.” But reassurances from Ryan Kavanaugh’s company that the film is coming out as planned have been scratched, with the Kristen Wiig-Zach Galifianakis comedy now postponed indefinitely.
Variety learned about the postponement from international distributors, who complained that they were unable to release the film until it comes out in the U.S. and they now have no idea when, or if, that will happen.
Distributors learned of the delay Friday from Relativity international president Camela Galano. The company did not acknowledge the move until confronted with an email Galano sent more than two dozen foreign film operators. “Relativity Studios has moved ‘Masterminds’ from its scheduled October 9th release date,” the company then confirmed in a statement, “and we expect to announce a new 2015 release date shortly.”
The delay is creating big headaches for the film’s foreign distributors, who will be out the film’s box office and any marketing bucks they have spent on the film. Redoubling their worries, the foreign companies are being pressed by one of Relativity’s many creditors — OneWest Bank — to cough up distribution fees for the unreleased film, according to a letter obtained by Variety.
The dispute over “Masterminds” is just one example of the collateral damage that has followed Relativity’s July 30 Chapter 11 filing and of CEO Kavanaugh’s inability, despite his reassurances, to control the outcomes at the company he founded 11 years ago. While Kavanaugh’s reps have suggested there will be an orderly process with the founder firmly in control, it is actually senior lenders who are pushing for a quick auction of the company, or its pieces.
The bankruptcy court is scheduled to hold a hearing Friday to discuss the request by the lenders — which include Anchorage Capital Group, Luxor Capital Group and Colbeck Capital — to hold an October auction for Relativity. Recent filings in the case revealed a minimum $250 million stalking horse bid from the hedge funds. The lenders are hoping that price becomes the floor for higher bidding by outsiders, though some experts are skeptical that the company will draw a sweeter offer.
Dozens of unsecured creditors, with a total of $89.9 million in claims, also are expected to object and to try to delay the sale until they get some return on their unpaid bills.
The demand by OneWest for payment from film companies around the world, in turn, has prompted a letter from a lawyer representing Relativity Media demanding that OneWest back off. Such collection efforts must be put off during a bankruptcy proceeding, according to the lawyer, Andrew K. Glenn. If the bank (which is owed $27.8 million by Relativity) persists in efforts to collect from distributors, it could face sanctions, according to the letter from Glenn, who is with the firm of Kasowitz, Benson, Torres & Friedman.
OneWest already has been repaid much of the money it loaned the mini-studio. One of the founders of the bank, Steve Mnuchin, was a major investor in Relativity and previously on the board of the mini-studio. The fact that a bank connected to a former board member swept up $50 million just weeks before the bankruptcy filing has raised cries of foul from some Relativity creditors. Mnuchin has not responded for requests for comment.
Relativity’s demand that OneWest stop continued collection efforts with the “Masterminds” distribution companies went to Joseph Woolf, head of media and entertainment financing at OneWest. Woolf did not respond to requests for comment.
One foreign distribution executive said the postponement of “Masterminds” has created an “annoying and difficult” situation for his company. “This was our big late summer, early fall movie,” said Erik Engelen of Amsterdam-based A-Film, which distributes pictures in Belgium, the Netherlands and Luxembourg. “We spent money on this one and not on another. You can spend your money only once and so we now have a gap in our lineup that is impossible to replace.”
Engelen said his company was fortunate that it had not already spent money on publicizing “Masterminds,” like distributors in some other locales. He said A-Film previously had decided not to renew its distribution agreement with Relativity. He praised Galano, the international president for the studio, for working with him. But, explaining his company’s discontinuation of its distribution deal, he said: “We just are just not making any money at it.”