Relativity’s Latest Ticking Clock: Deadline Set to Challenge Low-Ball Bid for Bankrupt Studio

Ryan Kavanaugh has 31 days to court buyers to compete with $250 million offer from Anchorage, Falcon and Luxor Capital

Last Updated: August 10, 2015 @ 6:04 PM

Relativity Media has until Sept. 11 to find potential bidders for its remaining assets, according to documents filed Monday in a New York bankruptcy court.

No stranger to high-stakes deadlines, Ryan Kavanaugh’s studio is facing a stalking-horse bid from a group of its senior lenders, recently identified as Anchorage Capital, Falcon Strategic Investments and Luxor Capital.

If there are no other bidders for Relativity’s film, TV and fashion operations within 31 days, then the company will most likely be forced to accept the $250 million bid by the three investment firms, named RM Bidder LLC in court papers.

Relativity believes the value of the company is much higher than the lone offer currently on the table, an individual with knowledge of the leadership’s thinking told TheWrap.

Insiders expect that several additional bidders may emerge within the next few weeks; there are some indications that Kavanaugh himself may himself be a bidder in some capacity.

If there is more than one competitive bid filed, the court would undertake a sale-at-auction process. The stalking-horse group would also benefit from a higher auction price tag, as they’re currently owed roughly $361 million from the bankrupt studio.

Relativity Media declined to comment on the matter. Attorneys for RM Bidder have not yet returned TheWrap’s request for comment.

Next up for the Beverly Hills-based company and its creditors is a hearing on Friday in New York, in which bid procedures are expected to be finalized. U.S. Bankruptcy Court Judge Michael Wiles will revisit the company’s request for cash collateral — a loan against its liquid assets to cover day-to-day expenses.

In late July, company entered Wiles’ New York courtroom with hopes to secure a $45 million loan to cover operational costs. Wiles approved the more modest amount of $9.5 million.

On Friday, some or all of the remaining collateral request is expected to be released.

In addition, Wiles will have to sign off on any sale or auction of assets — as well as the timetable for the bidding and auction process, which Relativity and the stalking-horse group have aggressively set with a Sept. 16 auction and a sale hearing by Sept. 21.

That’s even sooner than the early October auction date that Relativity had proposed in its Chapter 11 filing last month — and that Wiles declined to endorse in a July 31 court hearing. “I will not tie my hands with deadlines,” he said at the time.

Pamela Chelin contributed to this report.