Creditors Disney Enterprises, Inc., Lucasfilm Ltd. LLC, Twentieth Century Fox Film Corporation, Warner Bros. Entertainment Inc., MVL Film Finance LLC, New Line Productions, Inc., and Turner Entertainment Co. (collectively, Studios), holding unsecured claims in the total amount of $62.4 million plus attorneys’ fees and interest, have prepared a Plan of Reorganization for debtor VidAngel, Inc. dated April 10, 2020.
The Studios claim that the Studios’ Plan is more favorable to Creditors and the Reorganized Debtor than is the plan proposed by the Chapter 11 Trustee, because:
1. The Studios’ Plan would pay Administrative Expenses, Priority Claims, and General Unsecured Claims in full on the Effective Date;
2. The Reorganized Debtor would not incur the costs of a Plan Administrator and his Professionals;
3. The Studios’ Plan guards against the Reorganized Debtor again becoming embroiled in copyright litigation with the Studios by ensuring that the Reorganized Debtor will not, under any circumstances, again make unauthorized use of the Studios’ or their Affiliates’ Copyrighted Works; and
4. Provided the Reorganized Debtor complies with the reduced Payment Obligations and Restrictive Covenants, the Studios will subordinate their Claims for $62.4 million plus attorneys’ fees and interest to the other creditors and will compromise tens of millions of dollars of those Claims; all of this provides the Debtor an actual chance of reorganization.
The Studios’ Plan is the only option supported by the Debtor’s largest creditors. The Studios’ Plan also offers the holders of Equity Interests the ability to retain their stake in the Debtor. The Studios’ Plan encourages the Debtor’s management — whom the Trustee has described as important to the Debtor’s continued operation — to remain in their day-to-day roles. Only if Neal and Jeffrey Harmon decide to leave these roles, would the Studios’ Plan appoint different management.
The Plan contemplates the Reorganized Debtor’s continued business operations.
The Reorganized Debtor will make payments from Cash available as of the Effective Date, to pay in full the Administrative Claims, Priority Tax Claims, and Class 1 and 2 Claims. The Studios’ Plan would pay Administrative Expenses, Priority Claims, and General Unsecured Claims in full on the Effective Date. The Reorganized Debtor would not incur the costs of a Plan Administrator and his Professionals.
Under the Studios’ Plan, the Reorganized Debtor can satisfy the Studios’ Claims by paying a fraction of those Claims over time and respecting the Studios’ copyrights. If the Reorganized Debtor violates the “restrictive covenants” or fails to make payments, the Studios will then be entitled to exercise their Default Remedies.
Class 2 consists of all Allowed General Unsecured Claims, except for Credit Holders’ Claims and Studios’ Claims. The holders of Allowed Class 2 Claims shall be paid from the distribution funds the full amount of their claim. Class 2 is not impaired under the Plan.
Class 3 consists of the Studios’ Claims. On the Effective Date, the Reorganized Debtor shall execute and deliver a promissory note to the Studios equal to the full amount of the Studios’ Class 3 Claims minus the Conversion Amount. The Reorganized Debtor thereafter shall pay the Studios a total of $14,000,000, which shall be payable in 56 quarterly payments over a period of 14 years. If all payments are made in full on a timely basis, and there is no other default under this Plan, the remaining balance of the Note will be forgiven by the Studios, and the Note will be deemed to be fully satisfied.
Class 5 consists of holders of Equity Interests in the Debtor. Each record holder of an Equity Interest in the Debtor will retain its interest in the Debtor, as the Reorganized Debtor on the Effective Date. Although equity interests will remain, Class 5 is deemed impaired under the Plan and entitled to vote to accept or reject the Plan.
A full-text copy of Studios’ Plan dated April 10, 2020, is available at https://tinyurl.com/r4soygq from PacerMonitor at no charge.
Attorneys for Studios:
Michael R. Johnson, Esq.
RAY QUINNEY & NEBEKER P.C.
36 South State Street, 14th Floor
Salt Lake City, Utah 84111
Telephone: (801) 532-1500
Facsimile: (801) 532-7543
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Thomas B. Walper
Kelly M. Klaus
Rose Leda Ehler
Munger, Tolles & Olson LLP
350 South Grand Avenue, 50th Floor
Los Angeles, California 90071-3426
Telephone: (213) 683-9100
Facsimile: (213) 687-3702
About Vidangel Inc.
Based in Provo, Utah, VidAngel, Inc., is an entertainment platform empowering users to filter language, nudity, violence, and other content from movies and TV shows on modern streaming devices such as iOS, Android, and Roku. The company’s newly launched service empowers users to filter via their Netflix, Amazon Prime, and HBO on Amazon Prime accounts, as well as enjoy original content produced by VidAngel Studios. Its signature original series, Dry Bar Comedy, now features the world’s largest collection of clean standup comedy, earning rave reviews from fans nationwide.
VidAngel filed a Chapter 11 petition (Bankr. D. Utah Case No.17-29073) on Oct. 18, 2017. In the petition signed by CEO Neal Harmon, the Debtor was estimated to have $1 million to $10 million in both assets and liabilities.
Judge Kevin R. Anderson oversees the case.
The Debtor tapped Parsons Behle & Latimer, as bankruptcy counsel; Durham Jones & Pinegar, Baker Marquart LLP, Stris & Maher LLP and Call & Jensen, P.C. as special counsel; and Tanner LLC as auditor and advisor. The Debtor also hired economic consulting expert Analysis Group, Inc.
George Hofmann was appointed as the Debtor’s Chapter 11 trustee. Cohne Kinghon, P.C., is the Trustee’s bankruptcy counsel. The Trustee also hired Call & Jensen, P.C., TraskBritt, P.C., Call & Jensen, P.C., and Magleby Cataxinos & Greenwood, P.C. as special counsel.