Beleaguered David Bergstein still hustling
Pursuing Miramax, Berlin deals as Capitol declared insolventTalk about chutzpah. David Bergstein is behind a group seeking to acquire the Miramax name and film library from Disney, while in Berlin, his Pangea Media Group and subsidiary Capitol Films will be hustling movies from their existing library during the European Film Market.
Pangea is pushing ahead on both fronts even though Bergstein's legal problems continue to mount, the company's domestic marketing and distribution staffers have been laid off, and there are questions about whether the firm controls some of the movies being offered to buyers at the Berlinale. These pics include "$5 a Day," starring Christopher Walken and Sharon Stone, and Taylor Hackford's "Love Ranch," starring Joe Pesci and Hackford's wife, Helen Mirren.
Despite his travails, Bergstein has found a Saudi Arabian investor and is working with Deutsche Bank to help him acquire the Miramax name and film library, which Disney values as high as $700 million. (There are other potential bidders for Miramax, including its founders, Harvey and Bob Weinstein.) Disney declined comment; Deutsche Bank did not respond to a request for comment.
Bergstein also did not return a call seeking comment, but there is a trail of legal actions that document his problems and maneuvers.
Last week in London, the High Court of Justice's Chancery division put Capitol Films into "administration," which is similar to Chapter 11 bankruptcy in the U.S.
The ruling comes after a year of legal tussles with Irish Reel Prods., which had been hired to do preproduction for a movie called "Mary Queen of Scots," which was eventually aborted. But before that, Andrew Lowe of Irish Reel said in a legal declaration that his company had spent more than 1.25 million Euros (about $1.7 million), which was not reimbursed as contracted. It was the Irish Reel case that led to Capitol being put in administration.
The legal action came as no surprise to Bergstein. Days before the ruling, he resigned as a director of Capitol, the company he and partner Ronald Tutor acquired in early 2006.
The filings show that Capitol is deep in debt, with a long list of unpaid creditors that includes Comerica Bank, SAG, the DGA, Newmarket Capital, Dexia Bank of Luxembourg, Cobalt Pictures, the U.K. Film Council, the New Mexico Investment Council, Allied Irish Banks, D.B. Zwirn Special Opportunities Fund and the Aramid Entertainment Fund. The obligations to Comerica -- Bergstein's long-standing banking partner -- are for at least 51 million pounds ($76 million).
The 150-odd movies in Capitol's library were said to be worth as much as $100 million in the past, but the decline in the DVD market and legal challenges to some titles have lowered that estimate to as little as $50 million, financial sources said.
A week after Capitol was put in administration, the first offer for its assets was a bid of $10 million by Veritum, a company controlled by -- Bergstein.
"He comes out of the distressed asset business, so he is always looking for ways to capitalize on a situation like this," a person who has done business with Bergstein said.
Bergstein aims to "get the cream of the movies out of the bankruptcy clean" -- removing licensing and financing obligations -- so they can be monetized again afterward, the source said.
Editor's note: A correction to this article is posted on the following page.
Aramid, which typically makes bridge loans with the movies as collateral, had moved to seize some Pangea assets. Aramid has foreclosed on "$5 a Day" and "Love Ranch" and have turned them over to agents to set up domestic distribution.
Also, Bergstein has never paid Stone $100,000 of her salary for "$5 a Day."
Slightly more than a year ago, Bergstein hired former New Line Cinema distribution president David Tuckerman to head a new domestic marketing and distribution group at Pangea, effectively replacing the one at ThinkFilm, the once-thriving indie Bergman acquired but then shut after owing $10 million in debts.
Among those debts was $88,962 owed to publicist Nancy Willen for services on movies. Her attorney, Vince Ravine, said Bergstein agreed to a payment schedule but never followed through.
Willen and Ravine went to court and won a judgment; a year later, Willen is still trying to collect.
Ravine also represents Image Entertainment, which is in a lawsuit with Aramid over the rights to "$5 a Day." Bergstein had licensed video rights to Image, then borrowed against the movie from Aramid. Aramid subsequently seized the film, claiming that ends Image's rights.
In the U.K. alone, there are reportedly 89 debentures, or court judgments, against Capitol and related entities. And litigation continues to emerge. On Friday, CNN sued in L.A. Superior Court for $101,513 in unpaid bills from Thinkfilm ads shown on its HLN channel.
In another L.A. Superior courtroom on Monday, attorneys for D.B. Zwirn -- which sued in November seeking $120 million it loaned to Bergstein entities -- were granted a motion for a judicial reference. That means Bergstein must face a trial in front of an arbitrator.
Pangea moved out of offices in Fox Plaza in Century City late last year, apparently still owing several months rent.
Now with offices in West Los Angeles, Bergstein retains about 30 employees, 10 of whom are attorneys. There were another dozen employees until mid-January, when Tuckerman and the marketing and distribution group he brought in about a year ago quit or were dismissed.
Tuckerman left after not being paid for 12 weeks -- representing $100,000 in back pay -- and others are owed at least a month's wages.
There wasn't much for Tuckerman and his team to do in any case, as money promised to release a half-dozen movies Bergstein had produced never materialized. Some movies haven't even been finished.
For instance, the $26 million romantic comedy "Nailed" -- which was shut down twice during production by SAG until Bergstein put up a bond to guarantee salaries for stars Jessica Biel, Jake Gyllenhaal and others -- didn't complete the last two days of production for lack of cash.
Director David O. Russell and the cast have moved on to other projects.
CORRECTION: Pangea Media Group/Capitol Films is not licensing the rights to the movies "$5 a Day" and "Love Ranch" at the ongoing European Film Market in Berlin as suggested. This article also misstated the amount the two companies owe Irish Reel Prods. The correct amount is approximately $175,000.