Relativity Lays Off 75 Staffers Prior to Potential Bankruptcy
A source says fashion executive Mitch Grossbach, president of M3/Relativity, is the highest-ranking staffer to receive a pink slip.
Relativity Media is shedding 75 staffers as it prepares for a possible bankruptcy.
“As Relativity continues to move forward with steps to strengthen its balance sheet and reduce costs, we've made the difficult decision to eliminate 75 full-time positions across several divisions," the company said in a statement.
"This is a necessary step to position the company for a strong future. We appreciate the dedication and hard work of all of our colleagues, and we are making every effort to assist and transition those who are leaving the Company,” it added.
Ryan Kavanaugh's financially embattled studio is expected to file for bankruptcy this week, sources close to the company tell The Hollywood Reporter.
The 11-year-old studio, which declined to comment on layoffs yesterday, acknowledged that it was reducing its staff of 350 by a quarter, but it is unclear where exactly the cuts are being made. A source says fashion executive Mitch Grossbach, president of M3/Relativity, is the highest-ranking staffer to receive a pink slip. Also, Angela Courtin, the company's chief marketing officer, resigned last week, the source added.
The studio owes hundreds of millions in debt and had been scrambling to come up with the money before today. Kavanaugh has been unable to meet a number of payment deadlines, including another key deadline Monday, according to sources. In recent days, lenders have been working to strike an agreement whereby Kavanaugh exits the company once bankruptcy papers are filed, they say.
Sources say Relativity president Tucker Tooley has been asked by the lenders to stay and manage the company. Likewise, president of film production Robbie Brenner will stay in her position, according to sources.
On the film side, there will be layoffs in development, production and physical production. Other units of the company, including TV, digital and branding, are likely to take major hits. The company has long been criticized for its large overhead given that its business model is based on films expected to earn less than $100 million worldwide.
Red, the joint distribution venture between Relativity and Luc Besson's EuropaCorp, isn't likely to be impacted by today's layoffs.
Insiders say those being laid off won't receive any severance.
The statement marks the first public comments from the company in two weeks as speculation continues to mount about the future of the company and its CEO Kavanaugh. Sources say there are multiple scenarios in play if Relativity files for bankruptcy. One would see Anchorage Capital, the lead holder of secured debt, take greater control of the company. Another possibility is Kavanaugh could make a bid to buy the company back in bankruptcy if he enlists a new equity partner.
July 19, 12:05 p.m. Updated with additional information.