Ryan Kavanaugh News Reality Media filed for bankruptcy reorganization in New York on July 30, declaring itself “hopelessly insolvent.” Reality Media has $560 million in assets but $1.18 billion in liabilities. Since May, before more than $330 million in outstanding debt became due, Kavanaugh, a 40-year-old wheeler-dealer from Los Angeles that co-founded the film and television firm in 2004, has been working feverishly to attract new investors and avoid a default. For years, many in Hollywood have predicted Kavanaugh’s demise: He got his start in the news business in the mid-2000s by pulling in finance to support $500 million-plus studio sheets of paper at Sony Pictures and Universal Pictures, after his first firm collapsed when he was 22. His youthful age, cargo plane lifestyle, and vocal political involvement (particularly in favor of Israel) all contributed to him being a focus of business interest. Even though Kavanaugh claimed to be revolutionizing the company with a system of algorithms that avoided risks whenever Relativity began creating and releasing one’s own films in 2010, many believed he would fail.
Few questions answered
What has it been like this for you over the last several weeks?
For the past month, my wife has always been in the hospital. I’m witnessing two of my children go through difficult times. It’s almost strange because one minute a doctor tells me, “I don’t know exactly what is going to happen to this baby,” and the next minute I’m having? “I don’t know what is really going to happen to that same baby,” my attorneys said. But everything has happened many years ago in my life.
With whom were you conversing? Is there a fund for VII Peaks in the Bay Area?
We were in discussions with a number of potential investors. Some of the discussions had resulted in definite, binding, and committed agreements. The transactions, such as the $350 million contract with VII Peaks, were blocked and/or stolen by a top executive and paid consultant who saw a new way to fill their own wallets while hurting everyone else in the firm.
When Bay Area firm VII Peaks Capital also said that it was investing “substantial equity” in Relativity but instead Toronto-based Catalyst Capital Group agreed to acquire $130 million in senior debt in early July, ryan Kavanaugh news felt like he had discovered a way out. Kavanaugh also alleges that Catalyst agreed to make a $170 million investment decision, however this is when his problems began. Catalyst was taken out by subordinate debt holders, led by hedge fund Anchorage Capital, on July 9th. Kavanaugh had ran out of time a few weeks later, so Relativity filed for Chapter 11 reorganization. Since then, he has mainly kept silent.