Live Entertainment May Face Bankruptcy : Videos: The future of the Van Nuys distributor, which defaulted on junk bonds last week, depends on whether it can reach agreement with its bondholders.

Live Entertainment Inc., which defaulted on $110 million in junk bonds last week, is teetering ever closer to bankruptcy, analysts said.

“My attitude is they’re obviously pretty darn close” to seeking bankruptcy court protection, said Keith Benjamin, an analyst at the New York investment firm Ladenburg, Thalmann & Co.

But the Van Nuys videocassette distributor still has a chance to survive the financial woes that have plagued it for the past year, Benjamin said. Live’s future now depends on whether it can come to an agreement with its bondholders, and whether the foreign investors who bought some of Live’s stock last week are willing to help Live resolve its problems.

The investors--Pioneer LDCA Inc. of Japan, Le Studio Canal+ of France and RCS Video of Italy--purchased 360,000 Live shares from Carolco Pictures Inc., a Los Angeles film production company best known for last summer’s blockbuster “Terminator 2: Judgment Day” and this year’s hit “Basic Instinct.” The foreign concerns, through their combined 47% stake in Carolco, had previously had an indirect interest in Live.

In selling the shares to the foreign investors for $2.19 each, Carolco reduced its stake in Live from 53% to 49.9%. Carolco said it sold the Live stock because if it had remained Live’s majority owner, Carolco, too, could have been deemed in default on its debt.

The three foreign companies also helped Carolco escape financial collapse in March by agreeing to provide $74 million in new financing for the debt-burdened filmmaker.

Live lost $107 million on $361 million in revenue in 1991, and said its auditors questioned its ability to survive. Last year’s loss was blamed on slower video sales, losses at its ailing retail division, various write-offs and the acquisition of videocassette distributor Vestron.

The next step for Live is to try to reach some resolution with the holders of the $110 million in senior subordinated notes, which carry a 14.5% interest rate.

Live will “probably offer them some combination of debt and equity,” said Norman Sapoznik, director of securities at the Pasadena brokerage Gallagher & Co. “If the bondholders say, ‘We want our money,’ then Live might be forced into a Chapter 11 filing.”

But, Sapoznik said, “it would be in the bondholders’ best interest” to make a deal.

If an agreement can be reached, said analyst Benjamin, a likely scenario would be for the foreign partners to acquire Live and then Carolco. “They’ve already gone very far in bailing out Carolco,” he said. “It’s in Carolco’s and the foreign partners’ best interest to eventually gain full ownership of Live” and its still-viable video distribution business.

Carolco, which has $120 million in bank debt that’s due in November, previously said it had hired New York investment banking firm Allen & Co. as an adviser.

Last November, plans were announced to merge Carolco--which is Live’s biggest supplier of films to release on videocassette--and Live in a complex stock swap. But the deal fell through after it became evident that the financial conditions of both companies were deteriorating and their stocks plummeted.

Michael J. White, Live’s general counsel, declined to comment on whether Live has considered a bankruptcy filing, or on any role the foreign investors might play in the company. “I’m not going to comment on what’s going to happen in the future, other than discussions are ongoing” with bondholders, he said.

Even if Live avoids bankruptcy, said one analyst, the company will still have a long road to recovery. “This is a long-term workout situation at best,” said the analyst, who declined to be named. For Live’s investors, “it’s dead money for an extended period of time.”

Live’s stock closed Monday at $2 a share, up 13 cents, and well below its 52-week high of $16 a share.