Entertainment mogul Jerry Weintraub--accused of trying to misappropriate $748,000 belonging to his collapsed film production company--tentatively agreed with his creditors to a confidential settlement of the Los Angeles Superior Court case late Friday.
The case revolves around the sale of certain rights to the “Peter Pan” story by Weintraub, the veteran movie producer who is known as President Bush’s best friend in Hollywood.
Film Asset Holding Co., a firm formed by Bank of America and Credit Lyonnais Bank Nederland, had accused Weintraub this month of devising “an elaborate scheme” to divert the value of the rights from his firm, Weintraub Entertainment Group, to himself. The company is in bankruptcy reorganization.
In a telephone interview Friday, Weintraub said the suit “should never have been filed” and would be quickly disposed of. Patricia L. Glaser, the banks’ attorney, confirmed that a tentative agreement had been reached but declined to provide further details.
Weintraub sold the “Peter Pan” rights to Sony Pictures Entertainment in the fall of 1990, when the studio was developing the movie “Hook.” When Weintraub Entertainment Group tumbled into bankruptcy, Weintraub and the banks agreed to place the money in an escrow account, the suit states.
The banks held that Weintraub later violated the agreement by structuring the deal so that most of the money paid for the “Peter Pan” rights was considered a producer’s fee owed to him.
“He devised a scheme whereby WEG would receive a disproportionately small portion of the consideration for the sale of the WEG rights, while he, as an individual, would receive most of the consideration,” the banks stated in the lawsuit.
The banks maintained that Weintraub had no rights to those fees under an exclusive employment agreement he signed as chairman of Weintraub Entertainment Group in 1986. The agreement said Weintraub was bound to work on an “exclusive full-time basis” for the company.
In return for his services, Weintraub received a salary of $1.5 million a year plus annual bonuses, a $2,000-a-month car allowance and business travel expenses for himself and his wife in certain cases, according to documents filed in support of the lawsuit.
Weintraub Entertainment Group filed for Chapter 11 protection from its creditors in September, 1990, after its banks called in $84.8 million in loans. Weintraub had formed the public company with $461 million in backing after producing such hits as “The Karate Kid” and “Oh, God.” But WEG was ultimately undone by a string of disappointing releases.
Weintraub, a longtime friend of President and Mrs. Bush, has since signed a production agreement with Warner Bros., the Burbank-based movie studio that is a division of Time Warner Inc.