Netflix Files Objection to Relativity Media Reorganization21 Jan, 2016 By: Erik Gruenwedel
SVOD giant cites lack of assurances from bankrupt studio
Netflix Jan. 21 joined a slew of last-minute third-party filings against Relativity Media in U.S. Bankruptcy Court in New York, which is overseeing the studio’s Chapter 11 filing and fiscal reorganization.
In its latest claim, Netflix said it has paid Relativity “hundreds of millions of dollars in license fees” for exclusive domestic and Latin America streaming rights to an undisclosed number of movies.
Last year, Relativity delivered to Netflix The Woman in Black 2: Angel of Death, Black or White, The Lazarus Effect and Desert Dancer. The studio is slated to deliver to Netflix an additional 14 movies through 2017.
Founded in 2004, Relativity filed for bankruptcy last July citing debt of $1.2 billion and assets of $560 million.
Specifically, Netflix questions the validity of Relativity’s reorganization (“No meaningful information on who will run the day-to-day operations or their qualifications, and no business plan or other information to support the debtors’ incredibly optimistic financial projections,” wrote the SVOD service in the filing), adding that its license agreements with Relativity are complex, requiring “significant performance requirements,” including development, production and theatrical releases of multiple movies.
“This is not a situation where adequate assurance of future performance can be demonstrated [simply] by showing that the reorganized debtors expect to have a pot of money to fund their operations in connection with their exit from bankruptcy,” Netflix wrote.
Indeed, the SVOD service questioned the source for Relativity’s claimed projection of $160 million in new equity. While maintaining support for the studio’s fiscal challenges, Netflix said it would like to see additional details.
“Unless and until Netflix consents to assignment, and is provided with meaningful, detailed adequate assurance appropriate to the size and scope of its contracts, the requested assumption must be denied,” the streaming service wrote.