Citing a failure to comply with the court, federal judge says three companies will be administered by a trustee
David Bergstein may finally be out of options and time.
Citing a "willful failure to comply," Federal Court Judge Barry Russell placed the three remaining companies run by the controversial film financier into bankruptcy on Wednesday.
There will be no further trial, and the companies' assets will be liquidated to pay off the over 30 creditors currently suing Bergstein for millions of dollars in unpaid bills.
"This is a total vindication for my company and all its investors and the number of small creditors who had the guts to stand up to bullies," Aramid Entertainment Funds' David Molner, one of the major creditors involved in the case, told TheWrap. "It goes to show the system works, and you can't get away with treating people like this. Justice has been served."
The three companies in question — R2D2, CT-1 Holdings and Capco — will join two other Bergstein controlled companies in Chapter 11. The financier's ThinkFilm and Capitol Films were formally declared bankrupt last fall.
All told, they boasted a library of some 1,300 films and, by Bergstein's own admission, generated some $100 million annually. Those films will now be auctioned off.
Bergstein did not immediately respond to TheWrap's request for comment. Earlier, however, he had disputed claims that his remaining companies were insolvent.
“All we have been focused on from the beginning is to keep the parent companies, R2D2 and CT1, out of bankruptcy. They are not insolvent,” Bergstein told TheWrap in October.
As the nearly year-long court fight has dragged on, Judge Russell has frequently expressed frustration with Bergstein, chastising the financier for impeding the efforts of court-appointed trustee Ronald Durkin. Wednesday's decision came after Bergstein repeatedly failed to come up with a full list of creditors.
It's not immediately apparent what, if any, legal avenues Bergstein has left to take. But while the trial dragged on it made for gripping theater, with the list of creditors likening Bergstein to a Bernie Madoff for the cinema set, while the film financier fought off their efforts to wrest control of his suite of companies with a dizzying number of court filings and motions.
Ratcheting up the intrigue was the fact that while his film companies collapsed around him, Bergstein was simultaneously advising Ron Tutor in his successful $660 million bid to buy Miramax from Disney.
The creditors have frequently argued that the former business partners holdings are commingled, which caused public relations headaches for Disney as it tried to unload its indie division.
Through it all, Bergstein, in the words of one court observer, worked the legal system like a maestro. But the crescendo clearly didn't go as planned.
(Photo by the Los Angeles Times)