David Bergstein’s ThinkFilm and Capitol Films Development were formally declared bankrupt by Federal judge Barry Russell on Tuesday afternoon.
The judge’s decision followed a three-hour hearing and had been expected after Bergstein’s lawyers missed a key deadline last week to oppose a motion for a summary judgment in the Chapter 11 hearing.
Bergstein is being sued for tens of millions of dollars by nearly 30 creditors – including advertisers, publicists and the Writers Guild West. Five Bergstein controlled companies have been named in the suit — the two declared bankrupt Wednesday, as well as R2D2, CT-1, and Capco.
“So far in this bankruptcy hearing, we’ve heard every excuse for why they’re supposedly not bankrupt up to and including the dog ate my homework and I got sun in my eyes. Today, they ran out of excuses on two of the five companies and it won’t be long before the same is true on the remaining three,” Aramid Entertainment Funds' David Molner, one of the major creditors involved in the case, told TheWrap.
Aramid is attempting to recover approximately $16 million from Bergstein and his business partner Ronald Tutor (who recently agreed to purchase Miramax from Disney in a complex deal that Bergstein helped broker).
Bergstein, however, said Wednesday’s ruling was not a setback and maintained that he had never disputed that the two companies in question were insolvent. The film financier said that Capitol Films was a small subsidiary company with little activity, and that he had already put it into administration in the United Kingdom.
“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 and the judge indicated today that will go to trial next year,” Bergstein told TheWrap via email.
Yet there was one blow to Bergstein’s case: Judge Russell denied an earlier motion by the film financier to force Aramid to put up a $25 million bond to demonstrate it has sufficient assets to pay costs if it loses the case. In that motion, Bergstein claimed that Aramid is an offshore company that is using the case to mask its own financial problems.
Molner was subsequently sued by investors in his film funds for for $50 million last September. Following Wednesday’s ruling, Molner told TheWrap and other media outlets that those claims were baseless and were designed to embarrass him.
Molner and the other creditors are hoping to give court appointed trustee Ronald Durkin the authority to control Bergstein’s companies’ assets. Judge Russell has previously reprimanded Bergstein and Tutor for “stonewalling” Durkin’s investigations.
The trial resumes on November 10.