David Bergstein calls himself the victim

THR EXCLUSIVE

David Bergstein is battling back.

The CEO of Pangea Media Group, faced with an involuntary bankruptcy filing in the U.S., legal administration of Capitol Films in the U.K. as well as lawsuits, judgments and other claims, called himself the victim.

His troubles, Bergstein told The Hollywood Reporter, stem from the 2008 collapse of his biggest lender, the DB Zwirn hedge fund, and aggressive legal tactics by creditor Aramid Entertainment Fund and its managing director, David Molner. Then there is his no-holds-barred business model: acquiring movies through foreclosure, which can wipe out prior obligations to talent guilds, sub-distributors and other creditors.

Bergstein has been the subject of an avalanche of bad publicity but insists his troubles stem from the challenges facing the indie movie business and the global financial meltdown as well as his own tough business style. An outsider who knows how to manipulate money but clearly doesn't bother with massaging talent or schmoozing with his partners, his protestations ring hollow with many of those with whom he has crossed paths.

Think of his predicament as a cautionary tale: It takes more than just wheeling and dealing in constructs as arcane as credit default swaps to make it in the clubby confines of the indie film biz.

Bergstein blamed Molner and his own former lawyer Susan Tregub, who now does legal work for Aramid, for adding to his woes. He pledged both would face legal consequences for trying to bring him down.

"They have done a lot of incorrect things," said Bergstein, adding: "Essentially Aramid's take on the matter was they couldn't get what they want to win fairly so they organized a very inappropriate involuntary bankruptcy filing which will get cleared up."

He said Tregub, who was his legal counsel for a decade, joined with Molner to "concoct a bunch of these declarations (but) they attached no evidence."

Claims that he didn't file tax returns, didn't remit payroll taxes and didn't keep proper accounting records are untrue, he insisted, adding that he expected "the trustee will quickly dispel all of that."

Bergstein said when bankruptcy court Judge Barry Russell "finds out what they did, he is going to be very upset. My expectation is that David Molner will be found individually liable."

Molner isn't impressed by Bergstein's threats.

"He made these claims in his legal opposition papers," said Molner. "But normally people who make that kind of sweeping statement are also able to show that they're paying their debts. He hasn't shown anybody he's paying his debts. If it's so personal, why did 30 creditors join me?"

Molner did hire Tregub but insisted nothing violated Bergstein's attorney-client privilege because the legal filings were all based on unpaid bills, judgments and statements from former employees and company consultants. The Chapter 11-style "administration" of Capitol Films in the U.K. is also misunderstood, according to Bergstein. He said his company initiated the proceeding as part of its legal battle with Zwirn. "They would not lift their liens for certain assets," said Bergstein. "As a result I could not operate those assets."

Over several years, Bergstein said his companies received nine loans totaling $75 million from Zwirn. When the financial crisis hit in 2008, Zwirn collapsed and the bankruptcy trustees demanded immediate repayment. They swept his company accounts for all the cash available, making him unable to pay bills or make payments on movies in production such as "Nailed," which is only now being finished.

"None of this would have happened if Zwirn had stayed in business," said Bergstein.

Bergstein also charged Trugeb, while his lawyer, failed to tell him about some lawsuits, including one for a $950,000 gambling debt to Mandalay Bay Casino in Las Vegas. As a result, he said, "they got a default judgment. I'm now taking care of that and reversing it."

Bergstein denied ever using company funds to pay gambling debts even though as sole owner of some related entities, such as a company called R2D2, he could have. "All I've done is continue to put money into it," he said, "not pull money out of it."

Bergstein said the legal battle with Zwirn continues, even after his business partner Ronald Tutor "funded" a payment of $45 million last month. He said they have sued for another $55 million, but he insisted much of that is excessive interest or items in dispute.

"A lot of problems happened (because of Zwirn) that caused legitimate problems to third parties where they couldn't get paid on time," said Bergstein, adding: "We did the best we could but people don't care."
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