There’s a Downside to Celebrity

The music has stopped at the Celebrity Theatre. Actions in a pending bankruptcy case could determine when it can play again and who will be presenting it.

Attempting to hold on to the theater is Edward J. Haddad, whose company, California Celebrity Theatre Inc., has leased the building since June 1987 from its owner, the Leo Freedman Foundation.

Haddad’s company filed for Chapter 11 protection Dec. 16 in U.S. Bankruptcy Court in Santa Ana. Court documents reveal that Haddad is at odds with both Avalon Attractions, the Encino-based concert company that he hired to run the Celebrity, and the Freedman Foundation. Haddad and the foundation have been engaged in a lawsuit over whether California Celebrity has met its rent obligations and is entitled to retain its lease on the 2,800-capacity theater-in-the-round.

According to a document in the bankruptcy file, Haddad’s company (he is the president and sole shareholder of California Celebrity) earned $550,000 from theater operations in 1991 and $440,000 in 1992. But its 1993 income was zero, because, according to one of Haddad’s filings in the case, “Avalon Attractions has not remitted funds.”

“The plan is to get Avalon out of there,” said Albert M. Sheppard, Haddad’s bankruptcy attorney. Sheppard said he could not answer other questions pertaining to the theater.

Haddad could not be reached for comment. Contacted at the theater recently, Haddad’s brother, Alex, said “everything’s on the go, moving forward. . . . We’ve got to start booking and stuff.” But he said only Edward Haddad could answer questions concerning the Celebrity’s financial situation and its plans for resuming concert bookings.

The most recent show at the Celebrity was on New Year’s Eve, with comedian Howie Mandel. No shows have been booked for 1994. A recorded message on the theater’s business lines advises that “upcoming events will be announced shortly, so keep checking with us.”

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Randy Brogna, vice president of venue operations for Avalon Attractions, said the company is unwilling to book more shows at the Celebrity while Haddad’s bankruptcy petition goes forward.

Brogna said that since March, 1993, Avalon has been under contract to manage the Celebrity for Haddad. Brogna acknowledged that Avalon did not turn over any theater revenues to Haddad’s company in 1993. The reason, he said, was that Haddad owed the money to Avalon for “operational fees and management fees” dating back at least to 1992.

Brogna said representatives of Haddad locked Avalon out of the Celebrity just before the Mandel show on New Year’s Eve. “I couldn’t address his motives,” Brogna said. “He has taken it upon himself to change the locks. My information is he’s in the building, attempting to operate.”

Avalon would like to resume promoting at the Celebrity when the theater’s financial situation becomes stable again, Brogna said. “We love the building, we support the building, and I think it’s a very important building for the Orange County marketplace. I hope the Celebrity Theatre doesn’t remain dark for a long time. That all depends on the courts and (the Freedman Foundation).”

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The Celebrity’s attractions have been wide-ranging, from country singers such as Merle Haggard and Willie Nelson to rapper L.L. Cool J to such R&B; acts as Luther Vandross and the O’Jays, to folkie Gordon Lightfoot and the rock band Squeeze.

Ellis Stern, co-trustee for the Freedman Foundation, a nonprofit philanthropy that supports the arts, said that California Celebrity Theatre Inc. is three months behind on its rent and that “it’s really up to the bankruptcy court” whether Haddad’s company will be able to keep its hold on the theater.

“My understanding is he has a certain amount of time where he will either affirm the lease and make payments, or reject the lease and be out,” said Stern, a Los Angeles attorney. “I think he has to do that within 60 days. It’s a fairly short fuse.”

If Haddad loses the lease, Stern added, “we would certainly look for other tenants to run the building. The Freedman Foundation is not in the business of running a theater. It’s not in our charitable charter, nor do we have the expertise.”

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California Celebrity’s bankruptcy petition lists $196,713 in debts. They include $22,000 in federal and state taxes, $52,000 owed to the landlord, smaller amounts owed to several radio stations and $54,100 owed to music publishers from a March, 1993, judgment in a federal lawsuit.

In that case, 10 song publishers successfully sued the Celebrity for allowing their songs to be performed at the theater during 1991 at a time when the Celebrity was not paying license fees to the performance rights clearinghouse, ASCAP. ASCAP (American Society of Composers, Authors and Publishers) charges venues that present live or recorded music a license fee, from which performance royalties owed to song publishers are paid. Haddad said in court documents that managers running daily operations at the theater had allowed the license fees to go unpaid and that he was never informed that the Celebrity’s ASCAP license had lapsed.

In his bankruptcy petition, Haddad lists theater assets of $691,000. Equipment, supplies and furnishings account for about $96,000; the Celebrity’s liquor license is valued at an additional $40,000. Haddad’s assets list also includes an “unknown” amount owed to California Celebrity by Avalon Attractions.

More than half the corporate worth--$400,000--involves uncollected payments from a 1991 judgment in a breach-of-contract suit that Haddad won by default against a former partner in the theater, whom Haddad alleged had mismanaged the business.

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In a pending lawsuit in Orange County Superior Court, Freedman Forum, the theater-holding entity of the Freedman Foundation, contends that the Celebrity underreported its income in 1987-88 by about $600,000 and that a percentage of that amount, totaling about $48,500, should have been paid as additional rent. According to the suit, the Celebrity reported $2.75 million in revenues from December, 1987, through November, 1988. The Freedman Forum claims that an audit it commissioned showed revenues of $3.34 million for that period. In court papers, Haddad has denied the alleged discrepancy.