September 07, 2011 4:24pm PT by Alex Ben Block
David Bergstein Wins in Court As Judge Refuses to Give Control of Film Companies to Trustee
In a set back for the trustee overseeing the bankruptcy case involving ThinkFilm, Capital Film and other movie companies that were overseen by David Bergstein, a federal judge on Tuesday denied motions to consolidate all of the companies and their related subsidiaries and give complete control over all of their operations to the court appointed trustee.
After an intense day of debate by teams of lawyers on both sides, Judge Barry Russell denied the motions by trustee Ronald Durkin, who contended the five entities in the involuntary bankruptcy and a dozen subsidiaries were “hopelessly entangled,” and that the only way to get back any of the money lost by creditors was to allow him complete freedom to administer them.
“In this case I am not satisfied at all,” said the judge. “I find that there is not sufficient evidence for consolidation or to take control.”
The judge said that the trustee, who was represented by his attorney Leonard Gumport, could re-file for consolidation, but it had to be done on a company by company basis, and not as group of entities that are all related.
This was a blow to the strategy that Durkin has pursued to treat all of the companies that Bergstein controlled, and a number of entities owned by his former business partner Ronald Tutor, as one big inter-related matter.
Lawyers for Tutor argued that he is the largest creditor in the case and as such should not have his interests subordinated behind smaller creditors, or erased completely. Tutor is said to be owed in all more than $90 million.
Tutor’s attorney also insisted his client has no more connection in his business activities to Bergstein.
An attorney for Raspberry Financial, an entity that recently took control of the assets of the unreleased movie Nailed, insisted that his company is separate from Tutor, although it appears Tutor still holds some interest in the movie. Although the director of Nailed, David O. Russell, has left the project, the rep for Raspberry insisted they are spending at least $750,000 more, beyond $7 million already invested, to complete the movie.
It is unclear where Durkin goes from here. He has spent over a year working on the case as trustee and has not been paid anything. His money comes out of the estate of the bankrupt companies, but if Tutor is able to claim he gets whatever there is to get, it is not clear it pays for Durkin to continue.