7:40am PT by Alex Ritman
'Kung Fury 2' Producers Sue Chinese Financier for Failing to Pay $10 Million
There’s a spot of trouble brewing in 1985 Miami.
In 2015's Cannes-bowing short film Kung Fury — a cheesy and comically over-the-top homage to 1980s martial arts and police action movies that became a viral sensation on YouTube — the titular cop goes back in time to fight the Kung Fuhrer, Adolf Hitler. But it seems there's an off-screen battle ahead before the long-awaited feature film sequel is going to be ready.
Producers of Kung Fury 2, starring Michael Fassbender, Arnold Schwarzenegger, David Hasselhoff and writer-director David Sandberg (reprising his role as Kung Fury himself), have filed a lawsuit against Creasun Entertainment USA, the L.A.-based financing and production arm of Minglu Ma’s Chinese banner Creasun Media.
At the heart of the lawsuit, which is a complaint for breach of contract and fraud, is the accusation that Creasun hasn’t provided promised funding of $10 million, a move that has effectively shut down production on the project, currently in post-production.
The Hollywood Reporter first revealed that Creasun Entertainment USA was joining Kung Fury 2 as a “major investor” in May 2019, with the company taking a majority stake in the film and coming aboard as co-producers alongside KatzSmith Productions (It) and Argent Pictures (Hacksaw Ridge). Endeavor and CAA were handling sales on the film, which started principal photography in July 2019 in Bulgaria and finished in September 2019 in Germany, reportedly on time and on budget.
According to the complaint, which was filed Sept. 16 in L.A. Superior Court by KF2EUG, the German private limited company created to produce the film, Creasun agreed to fund two-thirds of Kung Fury 2’s $33.4 million budget, totaling about $22.3 million. Of this amount, $10 million was to be paid to VFX powerhouse Double Negative for the sizeable post-production work.
However, the lawsuit asserts that having paid the $12 million in debt financing (albeit in a "piecemeal fashion"), Creasun failed to follow up with the remaining money it had promised. This eventually led to Double Negative stopping work on the film.
The complaint also alleges that Creasun has since offered a "litany of excuses," including the U.S.-China trade war and wire payments being sent to the wrong accounts.
After Creasun allegedly "torpedoed" efforts to bring in a replacement financier, one of the producers questioned the company’s ability to fund its remaining obligations, resulting in an HSBC letter being produced by Ma in August purporting to show available funds of $4 billion.
However, the complaint claims that the document "appears to have been materially altered," with the text including the amount in a different font and featuring a strange mark above the word "billion" that would suggest an alteration has been made. It also says that the reported money relates to CA International Ltd., and not Creasun, and therefore doesn’t prove it has access to the funds.
Co-written by Sandberg and Tyler Burton Smith, Kung Fury 2 is set in 1985 Miami, where Kung Fury — the "greatest damn cop of all time" — must fight a mysterious villain and stop Hitler from attaining the ultimate weapon. The film is very much a passion project of Sandberg, but producers now claim that the actions of Creasun jeopardize the entire production, increasing the cost of restart, stopping the project from accessing funds within Germany and making it virtually impossible for it to be completed on time and on budget, putting at risk its obligations to distributors, producers and financiers.
"We are deeply disappointed in Creasun’s failure to complete its funding obligations," said Kung Fury 2 producer Philip Westgren (Hellboy, Midsommer), also a principal of KF2EUG, in a statement to THR. "Our attempts to resolve this situation have only been met with stonewalling and improper actions to further disguise Creasun's contractual breach. We are undertaking these legal actions with the full support of the other financiers and key parties involved. The filmmakers look forward to finishing this movie in the way that it deserves to be."
In response, THR received this statement from the attorney representing Creasun Entertainment USA and Minglu Ma.
"The lawsuit which was filed against my clients is completely meritless and is legally deficient, obviously drafted to serve as a press release in an attempt to harm my clients' reputation, and the defendants intend to file a demurrer to have it dismissed. If the dispute cannot be resolved, then Creasun intends to file a countersuit. The lawsuit was filed because Creasun exercised its contractual rights to takeover the film and complete it in accordance with the agreements between the parties."
They added: "As the majority investor in Kung Fury 2 and as co-producers of the film, Creasun had the right to takeover the film and to finish it in collaboration with the director and the other creative elements which are involved. Omitted from Plaintiff's lawsuit is the fact that they refused to adjust the production schedule and take other necessary actions to address the realities of post-coronavirus film production. This put Creasun's entire investment at risk and the filmmakers' refusal to cooperate with Creasun to finish the film, and the act of filing a lawsuit to further obstruct its completion, are the sole reasons why production on Kung Fury 2 cannot continue at this time."
See the complaint below.