For only the fourth time in recent decades, a U.S. judge today seized interim control of a company while it's in the throes of bankruptcy. That's because David Bergstein, who runs Capitol, ThinkFilm and related entities, was described in court as overseeing "the Enron of the entertainment world." (His lawyers deny it.) The Hollywood Reporter's Alex Ben Block had fun with this trip downtown:
After listening to both sides for more than two hours in a courtroom crowded with creditors and their lawyers, veteran bankruptcy court Judge Barry Russell said that when the hearing began, he never would have thought he would actually appoint an interim trustee to take over. After all, according to [lawyer David] Neale, it has only been done in a U.S. bankruptcy case three times during the past 45 years.
However, said the judge, he was appointing an interim trustee to take over, examine the books and report on what is going on because "what I have heard is overwhelming evidence from the creditors," while the response from Bergstein's side is "not overwhelming as far as the issues."
Bergstein and his show business partner, billionaire construction executive Ron Tutor, were not present in the 16th floor courtroom downtown. Bergstein had filed a statement that said he did not take a salary. That brought a response from Neale, "There is no need to take a salary because all the cash is being siphoned off by him anyway."
Block says SAG, the DGA, WGA West, the guild pension funds and the Motion Picture Industry Pension & Health Plans are among the parties to the case and welcomed the naming of a trustee. The guilds contend that "Bergstein and his companies have consistently failed to pay residuals to actors, writers, directors and producers of the 1,300 movies they control through various entities."