×
You will be redirected back to your article in seconds

Relativity Media’s One-Time Partner Pushes for Liquidation of Failing Company (EXCLUSIVE)

UPDATED: Struggling Relativity Media should be forced into a Chapter 7 liquidation, one of the struggling media company’s many creditors demanded in a filing with the U.S. Bankruptcy Court in New York Wednesday, according to documents provided by one of the lawyers in the case.

The motion comes from Relativity Secured Lender, an entity used by Chicago investor Joseph Nicholas to become one of Ryan Kavanaugh’s last partners, as the Relativity Media founder fought to resurrect his company after filing Chapter 11 bankruptcy in July of 2015.

While the filing does not name Nicholas, it was made on behalf of Relativity Secured Lender, which has previously been identified in court papers as the vehicle Nicholas used to invest in Kavanaugh’s company, which once had ambitions of competing with Hollywood’s big studios. The filing says “RSL is an undersecured creditor owed over $35 million.”

Relativity did not immediately respond to a request for comment.

Variety has previously reported that Relativity has been unable to raise enough capital to make new movies or to distribute old ones. It has been reduced to a handful of employees and faces possible eviction from its Beverly Boulevard offices for failure to pay rent.

Kavanaugh’s ongoing involvement in the company is unclear, following reports in December that he was stepping down as Relativity’s CEO. It was also reported that producer Dana Brunetti, brought on to help Kavanaugh run Relativity’s film studio, had stepped away from the company.

The filing Wednesday makes the case for pushing the company — which emerged from Chapter 11 protection in April — into a liquidation. “Given the material defaults under the plan, the Reorganized Debtors’ ongoing
losses and lack of liquidity, and the questions about the effectiveness and trustworthiness of management, it is necessary and appropriate for the Court to convert these cases to one under Chapter 7,” the filing says. It adds that the shift to Chapter 7 status would allow “a trustee [to] take charge of the modest remaining assets, liquidate them, and distribute the proceeds accordingly.”

The filing notes that many bills have gone unpaid since Relativity reorganized, including more than $14 million owed to bankruptcy lawyers and other professionals. Relativity “will soon literally run out of cash and be unable to make payroll or hold onto their Beverly Hills headquarters,” the motion from the Relativity creditor claims.

Nicholas’s investment company said in the filing that it turned to the Chapter 7 demand, in part, because Relativity’s Kavanaugh had been “freezing out” his one-time co-CEO by refusing to provide information about the company’s operations.

The filing says Relativity was supposed to be “co-managed” by Kavanaugh and another firm, JGJ Equity Holdings. The entity is presumably another Nicholas investment entity, though it is not identified as such in the legal document.

“Repeated requests for documents and information have been disregarded,” the legal filing says. “The only exceptions were when the company had isolated sales of property which required the consent of JGJ. Kavanaugh was simply operating without the consent or participation of JGJ.” Kavanaugh allegedly ignored repeated admonitions that he was acting without the proper authority, required by the the company’s post-bankruptcy operating agreement, Nicholas’s legal filing says.

Among other unpaid Relativity debts cited in the filing — $30 million that the company was supposed to pay “RM Bidder.” That entity was formed by three investment funds that had dumped hundreds of millions of dollars into Kavanaugh’s venture and then came together to snap up the company’s TV division during a bankruptcy auction. The investment funds were Anchorage Capital Group, Luxor Capital Group and Falcon Investment Advisors.

More Film

  • WGA Agents Contract Tug of War

    Showrunners, Screenwriters Back WGA in Agency Battle, Sides to Meet Again Tuesday

    More than 750 showrunners and screenwriters have backed the WGA’s battle against talent agencies taking packaging fees and other changes to the rules governing the business relationship between agents and writers. The letter of support issued Saturday is significant because of the immense clout showrunners and prominent screenwriters possess in Hollywood. Several showrunners had recently [...]

  • Doppelgänger Red (Lupita Nyong'o) and Adelaide

    Box Office: 'Us' on Track for Second-Highest Debut of 2019 With $67 Million

    Jordan Peele’s “Us” is on its way to scaring up one of the biggest debuts of 2019, with an estimated $67 million from 3,741 North American locations. Should estimates hold, “Us” will be able to claim several milestones: the highest debut for an original horror movie (the biggest launch for any horror pic goes to [...]

  • 'The Dirt' Review: A Mötley Crüe

    Film Review: 'The Dirt'

    A long time ago, the words sex, drugs, and rock ‘n’ roll carried a hint of danger. The lifestyle did, too, but I’m talking about the phrase. It used to sound cool (back around the time the word “cool” sounded cool). But sex, drugs, and rock ‘n’ roll has long since passed into the realm [...]

  • James Newton Howard Danny Elfman

    New Trend in Concert Halls: Original Music by Movie Composers — No Film Required

    Movie and TV composers are in greater demand than ever for, surprisingly, new music for the concert hall. For decades, concert commissions for film composers were few and far between. The increasing popularity of John Williams’ film music, and his visibility as conductor of the Boston Pops in the 1980s and ’90s, led to his [...]

  • Idris Elba Netflix 'Turn Up Charlie'

    Idris Elba in Talks to Join Andy Serkis in 'Mouse Guard'

    Idris Elba is in negotiations to join Andy Serkis and Thomas Brodie-Sangster in Fox’s fantasy-action movie “Mouse Guard” with “Maze Runner’s” Wes Ball directing. Fox is planning a live-action movie through performance capture technology employed in the “Planet of the Apes” films, in which Serkis starred as the ape leader Caesar. David Peterson created, wrote, [...]

  • Zac Efron Amanda Seyfried

    Zac Efron, Amanda Seyfried Join Animated Scooby-Doo Film as Fred and Daphne

    Zac Efron has signed on to voice Fred Jones while Amanda Seyfried will voice Daphne Blake in Warner Bros.’ animated Scooby-Doo feature film “Scoob.” It was revealed earlier this month that Will Forte had been set to voice Norville “Shaggy” Rogers, while Gina Rodriguez would be voicing Velma Dinkley. The mystery-solving teens and their talking [...]

More From Our Brands

Access exclusive content