California Slaps $15-Million Tax Lien on Orion Pictures

Orion Pictures Corp., which already faces the threat of bankruptcy over a pile of unpaid bills, has been hit with a claim for more than $15 million in California back taxes.

The Franchise Tax Board lien, filed Tuesday in Los Angeles, freezes Orion’s assets in the event of a sale or bankruptcy. Such claims, known as jeopardy assessments, are commonly lodged against companies believed to be on the verge of collapse.

“It is a precautionary measure to make sure, if any assets are sold or liquidated, the state of California would be taken care of,” said Jim Reber, a spokesman for the tax board.

Orion declined comment, but sources said the company will challenge the claim.

The lien centers on Orion’s 1982 tax return. Sacramento tax officials would not elaborate on the nature of the claim, but sources said it involves the sale of an insurance firm by Filmways Inc. Filmways was subsequently purchased by Orion.

The tax claim was first made in 1989. Orion has rejected the contention that it is responsible for taxes due from the sale, sources said.

Orion has spent much of the year trying to dig itself out of a financial jam. The company, which has defaulted on more than $65 million in bank loans and bond interest payments, is working toward final approval of a $285-million restructuring plan. It would give bondholders a 70% stake in the company. Orion also has agreed to trim overhead by $45 million.

Wilbur Ross of Rothschild Inc., which represents bondholders, said the tax lien should not complicate restructuring efforts. The plan could be approved within two weeks, he said.

“This is just a case of the state trying to put itself in a cautionary position,” Ross said. “Given all the press attention Orion has had, I don’t find it very surprising.”

Orion’s stock closed unchanged at $2.50 a share on the New York Stock Exchange on Wednesday. Its stock and bonds soared earlier this month after details of the restructuring plan surfaced, then fell when Orion announced that it expected substantial second-quarter losses.

The New York-based company has been battered by a string of disappointing releases, but was also behind such hits as “Dances With Wolves” and “The Silence of the Lambs.”

Citron reported from Los Angeles and Ellis from Sacramento.