Relativity Bankruptcy: Judge Approves $9.5M In Interim Funding
The next hearing in bankruptcy court is scheduled for Aug. 14.
U.S. Bankruptcy Court Judge Michael Wiles, keeping Relativity on a short leash, has approved the company’s request to use $9.5 million in interim funding to maintain ongoing operations.
At the hearing in New York, Relativity's lawyers asked the judge to approve a $45 million debtor-in-possession loan, but the judge deferred a decision on making that amount available until the next hearing scheduled for Aug. 14.
In the meantime, Relativity can use $4 million to pay what are considered "critical vendors" in its film and TV operations. Other funds will be used to pay wages, salaries and employee benefits.
Relativity's attorneys also requested that the sale of the company take place by Oct. 2 and that creditors be given just 30 days to challenge liens on different assets, rather than the usual 60 days. But the judge refused to sign off on that time-table, saying, "I will not tie my hands with deadlines."
Relativity, the film and production company founded by Ryan Kavanaugh in 2004, filed for Chapter 11 bankruptcy protection on Thursday, listing assets of $560 million against $1.18 billion in liabilities.
A group of the company's lenders, led by Anchorage Capital and Luxor Capital, have stepped forward to offer $45 million in DIP financing, but the judge rejected their request for an auction by Oct. 2, saying that a quick sale wouldn't ensure the largest possible price.
Relativity's next film, Masterminds, starring Zach Galifianakis and Kristen Wiig, is scheduled for release Oct. 9, and part of the interim financing will be used to promote that movie.
Commented Kavanaugh in a statement issued after the hearing, "The ability to minimize the impact of this process on our employees and operations is among our most important priorities, and we are pleased that the Court has granted these motions, which will allow us to preserve value for our stakeholders. The orders the Court entered today are an important milestone in our reorganization."