Relativity Bankruptcy: Not Enough Celebrities Are Drinking Evian

The studio had a deal worth up to $8.75 million to promote bottled water products in TV shows, at film premieres and during press junkets.

At a hearing this morning, U.S. Bankruptcy Judge Michael Wiles presided over a ho-hum proceeding in the Chapter 11 case of Relativity Media. A procedure to establish bidding on the studio's minor assets was resolved, attorneys and investment banking advisors got their retention approved, and a few reality TV producers like Brian Lando and Jay Blumenfield made sure they would be paid for what was owed.

Some of the more controversial issues like bonus incentives for top Relativity executives won't be addressed until another hearing later this month.

Nevertheless, this day still brought a tad of refreshing drama.

For one thing, the production company behind the hit MTV show Catfish is objecting to "significant payments [that] are due and outstanding."

That won't disrupt the planned auction. As with Lando and Blumenfield, the judge would likely approve payments so as not to harm the value of the Ryan Kavanaugh-led studio in a sale.

More interestingly, the Relativity bankruptcy has offered an inside look into product placement in Hollywood.

Danone Waters of America is objecting to the assumption of an executory contract by delivering word that it terminated an agreement just days before the late July bankruptcy filing of the studio. The company struck a bargain whereby Relativity got at least $3.75 million for 18 months with the possibility of earning an additional $5 million for an additional two years for doing things like dropping off complimentary cases of Evian to the homes and offices of celebrities and photographing them "holding, drinking or otherwise interacting in a non-disparaging manner with an Evian or Badoit bottle."

According to the objector, Relativity only got five celebrities to pose.

Other failings allegedly included Relativity not having Evian served at enough film premieres, press junkets, and in vehicles to and from these events. The studio also allegedly failed to put the water bottles in television episodes, failed to provide DWA executives with VIP tickets, and failed to sufficiently penetrate the athlete and fashion influencer markets. The papers mention failings on the social media front too.

Danone Waters argues that even if the agreement didn't terminate before the bankruptcy, the contract can't be assumed, because Relativity is in breach with damages alleged to be more than $4.52 million.

For those who want to see what a branding integration contract looks like, here you go.