Relativity Still in Bankruptcy: Judge Delays Approval of Reorganization Plan

“You’re trying to get me to approve something that is not quite ready for approval,” U.S. Bankruptcy Court Judge Michael Wiles says Tuesday

Last Updated: February 2, 2016 @ 10:34 AM

A U.S. Bankruptcy Court Judge wants to see Kevin Spacey‘s name on a Relativity business card before he’ll approve the studio’s emergence from Chapter 11.

At a hearing in New York City on Tuesday, Judge Michael Wiles cited ongoing financial concerns and an unsigned deal by new studio leadership Kevin Spacey and Dana Brunetti as some of the reasons he won’t approve the company’s long-gestating reorganization plan.

“You’re trying to get me to approve something that is not quite ready for approval,” Wiles told attorneys for Ryan Kavanaugh’s bankrupt studio.

Fundraising was a major concern. Kavanaugh adviser and hedge-fund runner Joseph Nicholas was again called to the stand and grilled about his cash-raising efforts.

I’m not formally part of Relativity until we’re out [of bankruptcy],” Nicholas said. That seemed to be a recurring refrain at the hearing, as lawyers said Spacey would not sign an agreement until the company had formalized its reorganization plan.

But Nicholas insisted he’s been a part of conversations with parties interested in investing. “I’ve been introducing relationships and taking hands off as far as the due diligence … we will raise capital,” he told the court.

At present, only $20 million of a proposed $100 million in new capital appears on Relativity’s balance sheet.

As far as creditor objections to the proposed reorganization, attorneys said they only needed two signatures to fully resolve them, which they hoped to obtain over a lunch recess. They indicated that Netflix, with whom Kavanaugh recently had a nasty email war over Relativity’s lucrative output deal with the streaming service, had not come to the table.

The hearing carried over from Monday where counsel for Relativity said the company had reduced its pre-bankruptcy debt by nearly 70 percent, from $910 million to $280 million.

Relativity Media filed for bankruptcy in July 2015.