A judge has decided to place a moviestudio involved in an investment dispute with some members of theNew Orleans Saints under a special overseer after the studio's headignored her order to appear at a hearing.
Louisiana Film Studios LLC is the target of an involuntarybankruptcy suit filed by several members of a group of 27 investors- including past and present Saints - who bought what they thoughtwere $1.9 million worth of state movie tax credits.
On March 31, the buyers were due to be paid $1.33 for each $1invested, but state officials said studio CEO Wayne Read neverapplied for the credits. Read previously said he intended to repaythe buyers after finding other investors for the studio in the NewOrleans suburb of Jefferson Parish. He said he did not apply forthe credits because of confusion about which studio startupexpenses qualified.
In court, U.S. Bankruptcy Judge Elizabeth Magner said she hadbeen contacted Friday by Read via e-mail. The judge said Read toldher that he had been unable to hire an attorney and would not bepresent. Magner said she sent word back that his attendance hadbeen ordered.
The judge said she will discuss Read's failure to appear withthe U.S. Marshals Service.
Shortly after the hearing ended, Read issued a statement througha spokesman, Allan Katz, saying he would be meeting with threepotential investor groups within the next week in an attempt toraise capital to pay back the tax credit buyers and pay off othercreditors.
Read said he hoped new investors would bring in a new managementteam.
"I hope to be in a position to present a final plan to thecourt by late next week," Read said.
Under court procedure, the Office of the U.S. Trustee willappoint the overseer, who will be in charge of safeguarding thestudio's finances and tracking down assets that could be used topay off creditors, including the tax credit buyers.
William Steffes, lead attorney seeking the involuntarybankruptcy, said that the overseer could, in turn, tap someone withstudio experience to try to salvage the operation and qualify itfor tax credits.
Steffes said one potential asset is $452,000 Read paid Jan. 21to an Illinois doctor to settle a loan for a New Orleans movieproject - Mardi Gras Studios - that never got off the ground.Steffes said that payment came after all of the money for the taxcredits had been delivered to Read. Under federal law, that moneycould be taken back for distribution to the studio's creditors.
On July 22, Saints linebacker Scott Shanle, former punter MitchBerger and recently cut Saints long snapper Kevin Houser, who hassince signed with the Seattle Seahawks, filed the involuntarybankruptcy suit. Another creditor in the suit is a constructioncompany half-owned by Houser's wife claiming it is owed nearly$700,000 for work on the studio.
On Friday, Magner granted a motion to allow defensive endCharles Grant and tight end Jeremy Shockey to join the suit.According to a list obtained by the AP, Grant was the largestsingle investor in the credits, paying $425,000; Shockey paid$85,000.
Other tax credit buyers included Saints coach Sean Payton,quarterback Drew Brees and former star Archie Manning, according toauthorities.
Houser has said he told at least some of the Saints about thetax credits, but does not believe it had anything to do with hisrelease from the team. The Saints have refused to comment onHouser's release and the tax credit case.Copyright © 2014, Los Angeles Times