Post by The Ultimate Nullifier on Aug 21, 2015 13:21:10 GMT -6
variety.com/2015/film/news/relativity-bankruptcy-film-lenders-guilds-concessions-auction-1201575625/
Film Lenders, Guilds Get Concessions in New Relativity Media Auction Plan
The hedge funds pushing for a quick auction of Relativity Media have granted additional concessions — including a better chance of recovery for union members and lenders who financed film releases — in hopes that other creditors in the complex bankruptcy action will not try to slow down an Oct. 1 sale of the insolvent company.
The senior lenders — Anchorage Capital Group, Luxor Capital Group and Falcon Investment Advisors — said in a filing Friday that loans to RKA Film Financing, Macquarie and others tied to unreleased films “must be paid in full in cash” before those films can be sold as part of the company auction. The filing in U.S. Bankruptcy Court in New York also said that the terms for sale of the company must be modified to assure payment of residuals to guild members.
In addition, the lending group that hopes for a September auction of Relativity said it would waive the “break-up fee” it had initially proposed for the sale process in order to maximize potential proceeds to creditors. And the new filing says that a fund should be established to help creditors pursue any legal claims against Relativity.
These and several other concessions are designed to get other creditors to drop their efforts to block the Relativity auction, which has been tentatively set for Oct. 1, with a projected closing date of Oct. 20. The senior lenders have made an initial $250 million “stalking horse” bid in hopes of kick-starting offers from outside interests.
Issues surrounding the bankruptcy and the lenders’ proposal to stage the hurried auction of the company — founded by Ryan Kavanaugh 11 years ago — will be considered at a hearing Tuesday morning in Judge Michael Wiles’ court in Manhattan.
Various other parties to the bankruptcy — particularly Manchester Securities, a subsidiary of the New York-based hedge fund Elliott Associates — have suggested that the quick auction did not put in place enough protections to assure that they will recover their money. Relativity owes Manchester $137 million, according to the bankruptcy filing.
The lenders suggest in their new court papers that additional time to market Relativity and its holdings — principally a film studio and television production company — is not needed. The long run up to the bankruptcy and reports of the company’s financial straits already made potential takeover bidders aware of the company and its assets, the lenders argued. “They are aware of numerous potential purchasers (including both strategic and financial buyers) that may decide to bid on [Relativity’s] assets,” the filing contends, though it does not name those potential bidders.
The senior lenders objected to any depiction of them as holding a clear winning position “engaged in a loan-to-own gambit.” It was only the fear of recovering nothing from their loans that prompted the financial firms “to fund a sale process that balances efficiency and value enhancement, thereby making them uniquely qualified advocates for value preservation.”
Despite complaints, creditors like Elliott have not proposed an alternative reorganization of the company, the senior lenders contended. “The failure of the objectors to put their money where their mouth is provides further evidence that the risk of value degradation is very real,” Friday’s filing said.