Creditors File to Put MGM-Pathe Into Bankruptcy : Movies: The attempt comes as the studio continues negotiations for a $250-million loan that would keep it afloat.

Six creditors with more than $10 million in claims sought late Friday to force MGM-Pathe Communications Co. into bankruptcy, only five months after the movie and television studio was formed in a $1.4-billion merger.

The filing of involuntary bankruptcy petitions threatens to trigger similar steps by other creditors and to severely disrupt efforts by company Chairman Giancarlo Parretti to shore up the troubled studio’s finances.

The filing comes as Parretti continues negotiations with Credit Lyonnais, a European banking giant, for a much-delayed $250-million loan that would help keep MGM-Pathe afloat. Over the past two weeks, MGM-Pathe executives repeatedly have said they were working out the details of an agreement with the bank.

A company generally responds to an involuntary bankruptcy petition under Chapter 7 of the U. S. Bankruptcy Code by demonstrating an ability to pay bills or by agreeing to liquidate. The company can also seek protection from creditors while continuing to operate under Chapter 11 of the code.

MGM-Pathe has 20 days to respond to the court filing.

In a prepared release, MGM-Pathe called the petition “unwarranted” and said it will be “vigorously resisted.”

“MGM-Pathe has been paying its creditors and is in the process of obtaining additional financing which will substantially strengthen its financial position,” the company said. “It will be business as usual at MGM-Pathe, and the company anticipates the petition will be promptly dismissed.

Friday’s bankruptcy filing named as creditors Concorde-New Horizons Corp., a Los Angeles production company operated by filmmaker Roger Corman; Kristan & Co. of New York; Century Insurance Ltd. of Brisbane, Australia; Levy-Gardner-Laven Productions of Beverly Hills; the Theatrical and Television Motion Picture Special Payments Fund of Los Angeles, and Bill Lanese Advertising and Public Relations of California.

Corman’s company claimed to be owed $6.1 million in connection with low-budget films it produced for MGM/UA Communications Co. before it was purchased by Parretti’s Pathe Communications on Nov. 1. The other creditors listed claims adding up to about $4 million for various services that included investment banking fees, a completion bond, film residual payments and advertising services.

The creditors are represented by Stephen Chrystie of Chrystie & Berle, a Century City-based firm that last year filed a similar involuntary bankruptcy against Management Company Entertainment Group. That company is operating with new management under Chapter 11 protection.

Chrystie declined comment on Friday’s filing.

One individual familiar with the situation said he expected the creditor group as early as next week to ask that MGM-Pathe be managed by a court-appointed trustee. That individual said he was also aware of other creditors who expected to join the bankruptcy request next week. “Like a feast of hungry piranhas, everybody’s going to want a piece of it,” he said.

A clerk at the bankruptcy court said his office was contacted Friday by a number of creditors’ attorneys seeking to attach such motions as word of the filing spread in the legal community.

It wasn’t immediately clear if the filing would disrupt Parretti’s negotiations with Credit Lyonnais, which has lent hundreds of millions of dollars to MGM-Pathe and other Parretti companies in the past. A cash infusion from Credit Lyonnais or elsewhere would permit the release of the films, which could yield new funds to operate the company. It also was not clear why the loan negotiation has dragged on, although Parretti associates have insisted that only technical points remain to be worked out.

MGM-Pathe has been forced to delay release of 13 substantially completed films because it lacks funds to cover print and advertising costs and to pay vendors who will not provide services such as newspaper advertising unless past due bills are paid.

Individuals close to Alan Ladd Jr., a film industry veteran who runs MGM-Pathe’s movie division, have said that the executive was deeply frustrated by the unpaid bills and had considered resigning. But Ladd, according to those people, has been reluctant to leave before the films are released.

Ladd declined to comment Friday.

Parretti and other MGM-Pathe executives have blamed the cash crunch on unexpected bills inherited from the old MGM/UA Communications Co. Parretti has said he inherited about $55 million in unexpected bills because MGM/UA’s old regime, under majority owner Kirk Kerkorian, had withheld payments so they would fall to Parretti’s new management. A Kerkorian spokesman has declined to comment on Parretti’s assertion. Other MGM/UA executives have privately estimated the inherited bills at $100 million.

Preliminary and unaudited financial results show that the movie and TV studio had a $68.9-million operating loss on $526.4 million revenue for last year.

According to the unaudited financial statement provided by Parretti, MGM-Pathe had $347.8 million in revenue from its film, TV and laboratory operations and $178.6 million from its European movie theaters. The net loss of $36.2 million, which was smaller than the operating loss, included a $32.7-million net gain from the early retirement of debt.

A separate cash flow statement provided by Parretti shows that, between the Nov. 1 merger and March 5, MGM-Pathe paid $345.7 million to employees, film producers, bondholders and vendors, among others. According to that statement, the company spent about $31 million to repurchase some of its bonds in the period and disbursed $40.9 million on the production of four films that are shooting or in preparation. The statement includes a $6-million payment to Merrill Lynch Inc., apparently for services in connection with the merger, and $127.7 million in payments to various vendors.

MGM-Pathe spokesman Craig Parsons said the company received an extension that will allow it to file its audited results in a 10K annual report with the Securities and Exchange Commission after the Sunday deadline.

He could not explain the cause for the delay. “I don’t think there’s anything alarming there,” Parsons said. “They just needed an additional few days to complete it.”

Parsons said he did not know how closely the audited results would match with the unaudited figures, which were provided by Parretti in response to questions about the company’s finances.

Before the bankruptcy petition was filed, Parretti spokeswoman Arlene Cattani said Parretti and MGM-Pathe Co-Chairman Florio Fiorini were in Los Angeles working on final details of the financing package, which has been expected for weeks. “The feeling is good,” said Cattani. “Most probably, there will be an announcement Monday or Tuesday.”

Patrick Bastin, head of entertainment lending for Credit Lyonnais’s Netherlands bank, did not return a call Friday.

Among the films stuck in limbo until the company can pay its vendors are “Delirious,” starring John Candy, and “Thelma and Louise,” starring Geena Davis and Susan Sarandon.

MGM-Pathe was hurt not only by the overdue bills, but by the disappointing performance of its last several films, including “Rocky V,” “The Russia House,” and “Not Without My Daughter.”

Parretti is also involved in another bankruptcy case. In January, he lost an appeal in a Naples court of a 3-year, 10-month jail sentence for fraudulent bankruptcy. A spokesman has said Parretti will continue his appeal in the high courts in Italy.