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Internationalmedia Goes Bust
Addressing a Munich court after declaring itself bankrupt, Internationalmedia blamed a German operation called Eluvium Holdings for the ‘pending liquidity’ that had put ‘continued operations’ at risk, and claimed that Eluvium had links to David Bergstein, who was joint chief of the Capco Group, which had failed to pay overdue capital owed to Internationalmedia.
In January 2008, Internationalmedia announced that ‘a strategic group of investors around David Bergstein’ had bought a stake in the company, but Bergstein denied he was a part of the group – which would eventually become Eluvium Holdings – claiming he merely introduced the parties.
In response to Internationalmedia’s claims that he was partly to blame for their predicament, Bergstein told Daily Variety that he had ‘no involvement with Eluvium, none whatsoever,’ despite the fact that Eluvium shared a Santa Monica Boulevard address with his Capitol Films. Bergstein went on to accuse Internationalmedia of misleading investors by issuing fraudulent financial statements.
‘Internationalmedia posted a positive capital account when in fact they had a negative capital account,’ he claimed in a statement. ‘They’ve had negative cash flow for two years. They had a negative balance sheet but kept the full extent of their liabilities from the public.’
According to Internationalmedia, Eluvium took advantage of options enabling them to continually increase their stake in Internationalmedia but, after making initial payments of $5.1 million, failed to pay for the balance of those acquisitions. As these raised Eluvium’s stake in Internationalmedia to more than 30% they should, in accordance with German law, have made an offer to minority shareholders for the remaining shares but failed to do so.
To make matters worse for Internationalmedia, their CEO Konstantin Thoeren left the company just a week before the bankruptcy, leaving the group with no managing director to oversee operations at its subsidiaries, Intermedia Film Equities USA and Intermedia Film Equities in Britain.
Sascha R. Prestel, Internationalmedia’s chief financial officer and sole remaining member of its management board told Daily Variety, ‘We have not been able to replace Mr. Thoeren and currently have no one to manage the company. The future of the company is now in the hands of the insolvency administrator.’
Internationalmedia had already been damaged by the cancellation of Stopping Power, an action film that was to be directed by Jan De Bont in Berlin and star John Cusack, when financial backing fell through. Cusack sued Internationalmedia for $5.6 million in lost earnings but they contested the claim, saying R Media, the company which took over production of the film and which was also linked to Bergstein, was now liable.
The Following statement appeared on Internationalmedia’s website on 19th August 2008:
Company news:
Munich,
August 19, 2008 -
IM
Internationalmedia AG filed for insolvency proceedings at the Local Court in
Munich today due to pending illiquidity. The Management Board has decided on
this step because pending illiquidity puts continued business operations at
risk. The reason for the illiquidity is that the
Eluvium GmbH did not pay for exercised options.
IM
Internationalmedia AG already got into a financial disorder in the second
half of 2007 after the abrupt cancellation of the film project
STOPPING POWER. Since then no further project had been realized and the
capital measures at the end of 2007 and the cooperation with a strategic
investor did as well not bring the hoped for turnaround about.
The Management Board now aims at continuing business of
IM
Internationalmedia AG with the support of the insolvency administrator.
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