Case Update: Relativity Bankruptcy
Relativity Media has received court approval to emerge from bankruptcy. The studio, known for films like Limitless, filed for Chapter 11 bankruptcy during the summer of 2015. The company sought discharge of nearly $1 billion in debt, and has racked up $630 million in liabilities, with $280 million being owed to creditors.
What steps had the company taken to turn things around?
Relativity Media had hoped to secure $100 million from equity financing, yet has only come up with $20 million to date. However, investors claim that there are over 50 parties whom have shown interest in backing the company, but they were hesitant to do so before Relativity Media emerges from Chapter 11. Judge Michael Whiles, who presided over the case, shared some frustrations over the lack of specific financial information on Monday, February 1, yet approved the company’s exit from bankruptcy the following day.
In addition to seeking out investors, the company has also made some big changes in its management, with actor Kevin Spacey and producer Dana Brunetti taking the reigns back in January. Founder Ryan Kavenaugh appointed Spacey as chairman of the studio, while Brunetti became president. This moves to attract new, top-quality projects, which will further appeal to investors. As a final measure to turn its financial situation around, Joseph Nicholas, an investor in the company, has taken on a co-managing role and now oversees financial accounting. Time will tell if Relativity Media will succeed in securing the investments needed for it to thrive.
Like Relativity Media, many companies are forced to file a reorganization bankruptcy each year, though the number of filings in South Florida has dwindled in the past year. If your business is struggling financially, bankruptcy could be the answer you’ve been looking for. Navigating the bankruptcy process without the help of an experienced bankruptcy attorney could be a dangerous move. Contact the Business Bankruptcy Attorneys at Kelley, Fulton & Kaplan for a free consultation to learn about your options before making an decision.