Less than a year after it officially launched with grand ambitions of becoming a Hollywood mini-studio, several of the most prominent divisions of Global Road Entertainment filed for Chapter 11 bankruptcy Thursday in a stunning blow for U.S-China broker Donald Tang.
Global Road's film operation was thrown into chaos in recent weeks after owner Tang Media Partners, Tang's company, was unable to raise $200 million in financing. According to a filing in Delaware bankruptcy court, the debtor now reports between $100 million and $500 million in liabilities. The biggest liability comes from about $91 million owed to Bank of America.
The largest unsecured creditor is Bank Leumi, the Israeli financial institution that recently filed a lawsuit after a release of the latest Johnny Depp film City of Lies was postponed without payments under a loan agreement. Viacom, Disney, NBCUniversal, and TBS round out the list of the top five creditors — each owed several million dollars.
“Today’s filing for bankruptcy protection for Open Road Films solely encompasses domestic related film operations and does not include Tang Media Partners, Tang Media Entertainment, IM Global Television (both scripted and non-scripted) and IM Global," read a Global Road statement on Sept. 6. "IM Global Television and IM Global were re-branded earlier this year as part of Global Road Entertainment. Those entities will continue to operate as ongoing concerns working with existing and future partners."
Tang had grand ambitions when launching Global Road in October 2017 after hiring veteran Hollywood studio executive Rob Friedman to run the company he'd constructed upon buying IM Global and Open Road Films. The company's film library includes such notable works as Jobs, Side Effects and Nightcrawler.
Two weeks ago, banks took control of Global Road's movie unit, including Bank of America and East West Bank.
Layoffs quickly followed, with roughly 45 staffers let go. Of those shown the door, 40 worked in the company's Los Angeles office, while five worked in London. A total 144 people worked at Global Road and Tang Media Partners prior to the layoffs, with about 60 assigned to the film division. According to a bankruptcy filing, there are now 40 employees remaining and some of them are shared with other companies.
Most industry watchers assumed Tang had raised at least enough capital to carry the company through the slate of films it inherited from Open Road, no matter how poorly they performed. Last fall, the Reese Witherspoon comedy Home Again topped out at a disappointing $27 million domestically, while Midnight Sun — the first film released under the Global Road banner — earned just $9.6 million in the spring, followed by a forgettable $17.8 million for family pic Show Dogs earlier this summer.
Complicating matters, Global Road’s first acquisition, the Jodie Foster film Hotel Artemis, also bombed badly at the summer box office. The film, acquired for $4 million-plus before a multimillion marketing spend, topped out at $6.7 million in the U.S. and $11.2 million globally.
In recent days, Friedman and his team have quietly signaled that filmmakers with projects set up at Global Road can shop their films elsewhere, including upcoming releases The Silence (Dec. 7) and Playbmobil (Aug. 16, 2019), according to sources.
Global Road's demise follows the implosion of The Weinstein Co., which filed for bankruptcy earlier this year following the Harvey Weinstein scandal.
More filings in this bankruptcy case will spell out the procedure ahead, but FTI managing director Amir Agam is being positioned as the debtor's chief restructuring officer with an auction for assets being eyed. Under a proposed plan, which needs a judge's approval, interested buyers would be submitting bids by Nov. 2. No stalking horse buyer has yet emerged.
The bankruptcy is being handled by the law firms of Klee, Tuchin and Young Conaway.
Ashley Cullins contributed to this report.