Global Road Entertainment, the fledgling studio that sought to straddle the U.S. and China, will soon declare bankruptcy, sources tell Variety. A filing could come as early as this week.
The company has been on the brink of insolvency since Bank of America and other lenders seized control of the studio two weeks ago. The banks have since laid off nearly 50 employees and tried to sell several finished films.
Donald Tang, a former Bear Stearns banker based in China, formed the company a year ago when his Tang Media Partners acquired Open Road Films. Tang had purchased foreign sales and production company IM Global the year prior, and aimed to combine the two to create a global production and distribution firm. Tang has since been seeking to raise additional financing, either from his Chinese backers or other sources. He has struck out. Tang Media Partners had 144 employees before staff reductions took place.
Even as Global Road’s film side of the business has been taken over by lenders, its television and international sales groups have continued to operate independently. It’s unclear how Global Road will approach bankruptcy, but knowledgeable sources believe it is unlikely to reorganize. One scenario being discussed would have the company liquidate its movie assets, and sell its sales and television businesses.
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Open Road was struggling at the time it was sold to Tang, and in need of a cash infusion to release its movie slate. The studio debuted “Hotel Artemis” in June, which grossed just $6.7 million. Its most recent pic, “A.X.L.,” bombed with a $2.8 million showing in its opening weekend.
In early August, Global Road removed its next film, “City of Lies,” from the release schedule. At the time, there was speculation that the movie was pulled due to the erratic behavior of its star, Johnny Depp. However, lender Bank Leumi filed suit last week, alleging that the true reason was that Global Road could not afford to pay the $10 million it would cost to promote the film. The bank is seeking to recoup millions in minimum guarantees from Global Road and Miramax, which holds the TV rights to the movie. Global Road is said to be struggling under the weight of other debts as well.
A spokesman for Global Road declined to comment.