On Tuesday, the 9th Circuit Court of Appeals weighed in on the lengthy legal battle over companies formerly run by David Bergstein. The appeals circuit rules that a bankruptcy court acted within its discretion to remove the film producer as manager of Pangea Media Group and place the company into bankruptcy proceedings.
Five of Bergstein’s companies were forced into involuntary bankruptcy in March 2010. At the time, in a motion to appoint a trustee, Bergstein was accused by creditors of treating the companies as “if they were his own personal fiefdom and bankroll.”
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R2D2 was one of the companies, and it later was revealed in bankruptcy proceedings that it had a 100 percent interest in Pangea, the production entity responsible for the 2010 Kevin Spacey film, Father of Invention.
Trustee Ronald Durkin sought to use R2D2’s membership interest to remove Bergstein. In late 2011, a judge granted the request, leading to an appeal from Bergstein and his former business partner Ronald Tutor.
A five-page memorandum from the appeals court today finds no error in the bankruptcy judge’s handling. The appeals court is fine with the judge’s approving the trustee’s use of R2D2 property — authority over Pangea — overall.
“The Trustee submitted ample evidence to support the bankruptcy court’s reasonable conclusion that Bergstein could not be trusted to manage Pangea, which was wholly owned by R2D2,” states the ruling. “Specifically, the Trustee provided evidence that Bergstein failed to identify to the Trustee that Pangea was 100 percent owned by R2D2; verified bankruptcy schedules for R2D2 that did not list Pangea as a subsidiary; failed to provide the Trustee with any federal tax returns or financial statements for Pangea; and, through counsel, submitted papers to the bankruptcy court in 2010 that suggested Pangea was an operating, successful business, but later represented that Pangea was ‘a woefully insolvent entity.’”
Last September, a $6 million settlement deal was announced to resolve tensions between Bergstein and his chief antagonist David Molner at Aramid, though the bankruptcy and assorted related litigation has not yet been fully concluded.