Financial Doctor Has Medicine for Studios : Entertainment: John W. Hyde has found himself on emergency call in recent years helping to steer bankruptcies of film-related concerns.

John W. Hyde isn’t a name you’ll find on movie marquees. But without him, some Hollywood studios and distributors might now be absent from your local theater too.

Hyde, a modestly successful movie and television producer since the 1960s, is becoming the industry’s best-known financial doctor for studios, distribution firms, video post-production houses and other film-related concerns that have sunk into bankruptcy court.

In recent years he’s been hired by creditors, lawyers and accountants to help steer the bankruptcy reorganizations of Metro-Goldwyn-Mayer, Orion Pictures Corp., Qintex Entertainment and Peregrine Entertainment, to name a few.

Hyde is now overseeing the bankruptcies of two other well-known Hollywood entities: NSB Film Corp., formerly Hemdale Film Corp., whose credits include the Academy Award-winning movies “Platoon” and “The Last Emperor,” and AME Inc. in Burbank, once the largest video post-production firm in the business.

Hyde figures he’s been involved in 14 such emergency cases overall, and said his experience in different aspects of movie production, sales and financing is why he’s increasingly in demand.

Among other things, he was executive producer of “Das Boot,” a critically acclaimed 1981 movie about a German submarine during World War II. Hyde helped secure the film’s U.S. and foreign distribution, which in turn helped finance completion of the film.

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“I’ve always thought of myself as a generalist, and for a long time it worked to my detriment,” he said, meaning he never became a powerhouse in one segment of Hollywood. “Now I can call on all the parts of my background and experience and put them to work.”

Hyde, 51, is putting several others to work as well. He’s also chief executive of MCEG Sterling Inc., a Century City movie and video distribution firm that has a consulting division for struggling companies.

MCEG, in fact, was Hyde’s first patient. When the company filed under Chapter 11 of the federal bankruptcy laws in late 1990, its directors asked Hyde to take over. He ended up staying after MCEG emerged from bankruptcy 14 months later.

“It just snowballed after that,” he said.

He doesn’t operate without criticism, however. Creditors are known to grumble about salaries paid to people such as Hyde, not to mention the lawyers and accountants, because that cash is drained from the assets that otherwise would go to the creditors. (Every payment is first cleared by the bankruptcy court.)

Hyde does not work cheap. In the AME case, the court granted Hyde’s consulting business $278,400 for its work from AME’s bankruptcy filing, last July 22, through Nov. 30. David Gill, a lawyer who works for Hyde on the AME case, received more than $150,000.

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As trustee, Hyde also is legally entitled to get up to 3% of the bankrupt company’s assets when the reorganization is completed, even if it involves the company’s sale. So, if AME was sold for, say, $15 million, Hyde could get up to $450,000.

In the Hemdale case, a committee of the studio’s unsecured creditors last month objected to Hemdale’s bid to hire Hyde as chief executive for $35,000 a month, in part because it was “concerned about the amount of payments to other consultants and employees” that would be needed in addition to Hyde’s paycheck, according to court documents. Hyde got that amount anyway.

Hyde defended his firm’s compensation, noting that “once we start operating a company, its overhead falls way off and the major portion of the remaining overhead is our fee.”

When a company files for Chapter 11, it is seeking a haven from creditors’ claims in U.S. Bankruptcy Court. Those claims are held at bay while the company works out a reorganization plan to pay its debts.

The obvious goal is to pay off as many of the debts as possible. But the process usually gets sticky because there are disputes about the value of the company’s assets and all the creditors are scrambling to get their share of those assets.

“All I can do is get them the best possible settlement in my judgment,” Hyde said. “If the company could pay 100% of its debts, it wouldn’t be in bankruptcy.”

As chief executive or trustee, Hyde often runs the companies’ day-to-day operations and much more. He must get cash to keep the business going, reassure customers and his own employees, solicit new contracts, renegotiate leases and strike agreements among competing creditors, to name a few tasks.

In the case of AME, he’s also supervising its possible sale. Several bidders have expressed interest in AME, although any sale is also subject to the court’s approval.

AME, which specializes in rapidly making video duplicates of movies and TV shows for mass distribution, got into trouble after a disastrous $109-million leveraged buyout by an investor group in 1989. The company’s current annual revenue is about $23 million, half its former size. Hyde said he’s negotiating AME’s sale with at least two serious bidders, and that others can bid once the sale goes before the court.

“Hyde’s a very astute business person, he understands the industry and he is very diligent,” said Marcy J. K. Tiffany, the U.S. trustee in Los Angeles who nominated Hyde to the AME post. Hyde also is adept at persuading creditors to pump even more cash into an ailing company to keep it afloat while the reorganization proceeds, she said.

“John’s special ability is to provide the lenders, who may by now have become disenchanted with past management, with a sense of confidence that things will be done correctly in the future,” Tiffany said.

Paul Aronzon, a lawyer for MGM in its case, said Hyde is one of “the very few industry consultants who have both insolvency experience and industry knowledge.”

But it takes more than knowledge to guide a studio through bankruptcy, said Jonathan Lloyd, another industry expert who helped Qintex Entertainment through its Chapter 11 case, which ended in December, and who remains its president.

“The minute the bankruptcy occurs, you typically have a lot of very nervous people,” Lloyd said. “It takes a certain understanding of consensus-building and reassurance and trust to make it work.”

The movie business also has lots of big egos, and Hyde is able to delicately negotiate labor contracts, film sales and distribution rights while letting others take center stage, said Gill, his lawyer.

Nonetheless, in Hyde’s line of work, “nobody comes through one of these things being loved by everyone,” Lloyd said. “Everyone dislikes you a little bit.”

In the MCEG case, some creditors carped that Hyde made some quick financial arrangements before their committee was formed. He caught flack from other creditors for urging the court to free MGM (then known as MGM-Pathe Communications Co.) from bankruptcy to survive on its own; a few days later the judge did just that.

He also gets letters from irate creditors and stockholders who ask why he doesn’t try harder to seize assets from the corporate officers who rode the companies into bankruptcy. But such litigation often costs more money than could be recovered, he said.

“My job isn’t justice,” Hyde said. “Everything’s a compromise, and everyone has to give a little.”

As for AME, the company--with 270 workers--is rebuilding its business and generating positive cash flow from its operations, Hyde said. “I would love to take the credit, but I can’t,” he said. “It’s the employees who have rebuilt the company.”

One of those bidders for AME might be Andrew McIntyre, who founded and led AME before selling out for a $22-million profit in the 1989 buyout. McIntyre “will definitely be someone to reckon with” as the sale gets closer, Hyde predicted. McIntyre himself would say only that a late bid from him is a possibility.

Regardless, Hyde said he hopes to have AME in new hands by mid-year.

And regardless of how the company’s reorganization is finally judged, Hyde--not the lawyers, accountants or AME’s executives--will be the critics’ target.

“I didn’t cause the problem, but it doesn’t matter,” Hyde said. “I was the last one to touch it.”