3 a.m. and the Money's Gone: How Jeff Berg's Resolution Agency Unraveled

3am and the Money's Gone - H 2014
Newscom; iStock

3am and the Money's Gone - H 2014

The high-flying talent agency becomes a Hollywood cautionary tale after a bizarre China event, a series of late-night phone calls and a desperate plea for promised funding

A version of this story first appeared in the Oct. 24 issue of The Hollywood Reporter magazine.

At around 4 p.m. on Friday, Oct. 3, Jeff Berg, the chairman of Resolution, left his Century City office and drove to the Brentwood headquarters of Sitrick and Co., a PR firm that specializes in crisis management. There he sat face to face with its partners, Mike Sitrick and James Bates, as the future of Berg's ballyhooed 20-month-old talent agency hung in the balance.

It wasn't their first meeting: Berg and Sitrick had started discussing Resolution's problems in late June or early July, when the former ICM chief had come to realize that financing promised by China's Bison Capital Holdings was not materializing.

Bison (whose founder, Peixin Xu, is a director of Bona Film Group) had agreed to fund Resolution's operations as it entered the second phase of its short existence, after the agency was founded in late January 2013 with the support of private-equity backer Jahm Najafi. At the time, there had been talk that Najafi was investing as much as $200 million, though financial sources today say it was far, far less. Najafi lost at least an eight-figure sum in the investment.

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Now Bison was meant to be providing millions more. The deal had been initiated in summer 2013, when Berg was contacted by Jack Gao, a former News Corp staffer working for Bison. (He since has left the company and declined comment.) Contracts were signed in February, when the first payment was made to Resolution. After that, says a source, the money either came very, very late or in amounts different from those Berg was expecting.

Berg, 67, started to get nervous. Very nervous. And his nerves increased when he flew to China to attend a Bison-organized news conference, which was meant to promote the new deal, only to find what seemed like an investor-oriented event. It was "very strange," he told a colleague.

His worries increased in July, say industry sources, when Bison insisted on reworking the terms of its deal. Berg became so alarmed that he drafted a statement announcing Resolution's end — only to swing back around and believe there still was hope. By early October, however, it was clear all hope was gone.

Now, sitting with Sitrick and Bates in that Oct. 3 meeting, Berg knew they were at a crisis point. Berg had been using his own money to keep the agency afloat (how much is unclear), and Bison, whatever its contractual obligations, seemed unwilling to keep the cash flowing. (The Chinese company also has agreed to fund several AFI scholarships; contrary to previous reports, film school sources say the first scholarship was fully paid for and the money was quickly received.)

Berg left Sitrick and for the rest of the weekend embarked on a mad flurry of phone calls, joined by senior agent David Unger, who had helped orchestrate the China money. Back and forth the calls went with Bison, led by Raymond Xu, a Beijing-based executive who had replaced Gao.

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Bison pushed Berg to spend more of his own money and suggested other possible deals, while Berg prodded Bison to pay up. The two sides were at an impasse. Finally, at 3 a.m. on Monday, Oct. 6, Berg phoned Unger and told him it was over.

Six hours later, with legal counsel Jon Gumpert, Berg gathered the 45 or so remaining employees (down from 55 or 60) in a conference room in the Century City office and told them Resolution was dead.

What will happen next? Sources say Berg has been trying to find jobs for the dozen or fewer agents who remain — partly to help them and partly because Resolution then won't have to pay out their contracts. Two agents — Abram Nalibotsky and Pamela Goldstein — left for Verve on Oct. 13. Berg, Unger and intellectual rights chief Rich Green have yet to reveal plans, but ICM Partners — Berg's home for nearly three decades — has signed four agents (Steve Alexander, Katie Cates, Mike Hayes and Kevin Hussey) and Paradigm hired early defectors Martin Spencer and Adam Kanter.

Still unresolved is whether they will be able to keep commissions earned from deals negotiated at Resolution or will have to share them with the agency, whatever form it takes.

Another issue is whether Resolution will file for bankruptcy. Sources say Berg has brought in lawyers to discuss his options, but no decision has been made. (It is unclear who is advising him.) A bankruptcy filing could complicate matters for exiting agents and clients, in terms of who pays commission to whom.

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It's uncertain what will happen to Resolution's impressive 15,000 square feet of office space. Sources say rent has been paid through October, but Berg has another three years to run on the lease. It is unlikely Berg will remain there himself.

Also uncertain is what will happen to an ongoing lawsuit by Jeff Franklin, the agency's former COO, who sued Resolution claiming he hadn't been paid per an exit agreement.

Sources dismiss rumors that Berg and Unger will form a management company, saying Unger likely will join another agency. Meanwhile, Berg is retaining his clients, who include Roman Polanski, Julie Taymor and Nick Cassavetes.

The end of this upstart agency has drawn empathy from many inside Hollywood, even from rivals in the cutthroat agency business, but others are dry-eyed.

"You can't start up an agency bringing in agents who don't have cash flow and where you don't have the 'passive' income from other deals that you rely on every year when you set your budget," says one rival agent. "It had nothing to do with the funding — that's just a timing issue. It failed because they had a completely flawed business model."

Email: Stephen.Galloway@THR.com