1:23pm PT by Alex Weprin
Production Services Firm Deluxe Files for Bankruptcy
Deluxe Entertainment Services Group, the Hollywood production services provider that had been backed by billionaire Ron Perelman, filed for a prepackaged Chapter 11 bankruptcy protection Thursday.
The company’s lenders will assume control of the firm, which also owns postproduction companies EFILM, Company 3 and Encore, as well as VFX house Method.
Last month, the company and a majority of its lenders had agreed to a debt for stock swap that would see the company hand control over to its lenders. “All parties involved determined that the best way to implement the debt-for-equity exchange is through a controlled, efficient Court-supervised process, and today the Company took steps to start that process,” the company said in a statement.
When the financial restructuring is complete, it will reduce the company's long-term debt by well more than half and raise $115 million of new financing, the company said.
"We have been working to put Deluxe in a strong financial position, and these steps are the best and most efficient way to finalize and implement the comprehensive financial restructuring," said John Wallace, CEO of Deluxe in a statement. "This process will allow us to strengthen our balance sheet and gain the financial flexibility and resources to drive investment in key growth strategies with no disruption to our business and no impact to our employees, customers, vendors and other business partners."
Deluxe was founded in 1915 by William Fox, and was acquired by Perelman’s MacAndrews & Forbes holding company in 2006.
As the company’s financial needs hit a tipping point, however, MacAndrews & Forbes opted to discontinue its support, releasing a statement in August stating that it “decided not to participate in the refinancing,” leading to the restructuring.