Judge Freezes 'Birdman' Payouts to Some of Film's Investors (Exclusive)

Birdman Poster - P 2014

Birdman, the acclaimed film starring Michael Keaton, is already a commercial success, reaping more than $25 million to date, but some of the revenue will be sitting in a bank account rather than being distributed to some of the film's investors.

Last month, a New York judge entered a temporary restraining order that prohibits Partners VII, one of the investment vehicles set up for the film, from transferring funds collected from the film's distributor Fox Searchlight. The order came at the behest of Hoyt David Morgan, who formerly served as chief financial officer at Worldview Entertainment, one of Birdman's producers. On Jan. 30, a judge will consider whether a permanent injunction should be entered.

Morgan is currently suing Worldview, claiming that he invested more than $3.7 million in the company and, after leaving Worldview, entered into an agreement that entitled him to an executive producer credit on Birdman. He claims in his breach-of-contract lawsuit that the company owes him $2.7 million, which includes $1 million as the value of the denied credit.

After Morgan sued Worldview in July, the production company put blame on its ex-CEO Christopher Woodrow,  who was also formerly a vice president at Citigroup Global Markets. According to legal papers filed by Worldview co-founder Maria Cestone, it was Woodrow who made the separation agreement with Morgan without the knowledge of the company's board of directors.

Worldview then sued Woodrow directly in October, claiming he "embezzled and defrauded" the film company and left it "impoverished and imperiled." Among the damages sought was indemnification as result of his conduct. Woodrow returned fire with a $55 million lawsuit that, among other things, accuses board members of violating operating agreements and breaking into his personal email account. He seeks to liquidate the company.

As Worldview and Woodrow fight each other, Morgan has been waiting for the money he believes he is owed.

According to court papers filed by his attorney Usher Winslett, Worldview wanted to arbitrate the dispute, and when Morgan agreed, Worldview changed its mind. The purpose of doing so is "to delay the resolution of this matter as long as possible," writes Winslett.

Morgan says in court that he's likely to prevail against Worldview and the company has no viable counterclaims against him. "If the defendants believed they had any valid claims against Morgan, he certainly would have been named as a defendant" in the Woodrow suit, his attorney told the judge.

In seeking a temporary restraining order on the disbursement of Birdman money, Morgan cited the risk that he'd never be able to collect on judgment, that the "delay tactics [served the purpose of moving all assets out of Partners VII," and that the company could be insolvent. Even though Worldview has had other films in the pipeline, including Warren Beatty's long-anticipated next film, a memorandum in support of the motion stated that "none of the defendants' other films is likely to generate sufficient revenues to satisfy a judgment."

New York Supreme Court judge Eileen Rakower granted the TRO and set a Jan. 30 hearing. Birdman is considered to be a likely best picture nominee, and two weeks after nominations are announced, there will be a date in court that considers what to do about some of the money the film is generating.

Email: Eriq.Gardner@THR.com
Twitter: @eriqgardner