Relativity Bankruptcy: Ryan Kavanaugh, Senior Execs Forced to Take Steep Pay Cuts
The reduction in pay comes less than a week after the 11-year-old company, grappling with more than $1 billion in debt, filed for Chapter 11 bankrutpcy.
Senior executives at Ryan Kavanaugh's Relativity Media are being forced to take steep pay cuts as the embattled company moves through one of the biggest bankruptcies in Hollywood history.
The reduction is pegged in the 20 percent range, according to several sources.
Those impacted include Kavanaugh, president Tucker Tooley, co-chief operating officers Greg Shamo and Andrew Matthews (the latter is also chief financial officer). On the film side, Robbie Brenner, president of production for film, and Matt Alvarez, president of the multicultural division, will also see their checks shrink.
Relativity declined comment. It's unclear how many executives are impacted; one insider suggests it is only 10 to 15. Either way, morale at the company continues to suffer.
The move comes less than a week after Relativity — facing more than $1 billion in liabilities — laid off at least 75 employees and filed for Chapter 11 in a New York court. FTI Consulting bankruptcy specialist Brian Kushner, the officer in charge of restructuring Relativity, is working out of the company's Beverly Hills offices and is helping to guide the layoffs and reduction in pay.
Relativity Sports, Relativity EuropaCorp Distribution (the film marketing and distribution joint venture between Relativity and EuropaCorp USA) and Relativity Education were among those not included in the bankruptcy filing. Nor were they impacted by layoffs or pay cuts. However, the company’s fashion operation, M3/Relativity, was shut down last week and its employees let go.
A day after the July 28 bankruptcy filing, lawyers for Relativity sought approval for a $45 million debtor-in-possession loan, but U.S. Bankruptcy Court Judge Michael Wiles approved a much smaller amount, or $9.5 million, in advance of another hearing set for Aug. 14.