Bergstein returns fire in court filings
Contests creditors' facts; wants Aramid to post $25 mil bondEmbattled Pangea Media Group CEO David Bergstein has again taken the offensive against the creditors who brought an involuntary bankruptcy action against him in federal court in Los Angeles.
In a series of legal filings, Bergstein and allies are not only contesting the facts presented by creditors behind the action, but they are demanding that Aramid Capital Partners, which has been a leader among the creditors, put up a $25 million bond so that Bergstein's companies can collect damages should he prevail in court.
Bergstein charged in his personal declaration that Aramid is an offshore company with no real assets in the U.S., so if it loses and has to pay costs, it would be impossible to collect.
Bergstein also said in his filing that David Molner, who is chairman of Aramid, brought the action because he was angry when Bergstein would not modify his loans -- which were at 50% interest per year -- to help him out because of other bad loans that Aramid held.
"I refused to enter into this agreement," Bergstein said, "and that is when my relationship with Molner and Aramid completely splintered apart."
He also charged Aramid is "in a state of financial distress" and that Molner organized the bankruptcy action "to attack me personally."
Molner said Wednesday that Bergstein previously asked for a bond and the federal judge refused his request. "The motions he filed were an attempt to overwhelm the legal process, provoke required legal responses, drive up bills and eat up time," Molner told THR.
Bergstein also lays out the damage that he claims the legal action has caused him and his companies. "Pangea has already lost over $5 million of sales due to its customers' reluctance to deal with a company they worry is bankrupt," the filing said.
It also says that Pangea has been unable to collect debts from Image Entertainment and others because of the pending bankruptcy.
Karinne Behr, Pangea's head of international distribution, said licensing of the company's movies was bringing in about $150,000 a month before the March 17 insolvency action and that revenue has since dried up, even though Pangea is not one of the companies in the action. She said two deals in the works were terminated and that reps for German and Spanish companies told her "the bankruptcy case created too much uncertainty."
In a separate filing, Bergstein asks federal bankruptcy court Judge Barry Russell to protect him against the trustee appointed by the court to investigate the five companies he runs, which are the focus of the legal battle. Bergstein has refused to give a deposition in the case, allow his assistant to be deposed or turn over computer files because the trustee appointed by the court, he says in the filing, has refused to meet and set limits on what would be asked or what documents he had to produce.
The next key bankruptcy court date is July 20, when the judge is expected to rule on these motions and other related matters.