Hollywood’s three major talent guilds on Wednesday petitioned the U.S. Bankruptcy Court in Los Angeles to liquidate Gladden Entertainment--the film production company of onetime studio chief David Begelman and sports mogul Bruce McNall--for allegedly failing to pay $4.1 million in residuals to actors, directors and writers.
The Chapter 7 involuntary bankruptcy filing means a return to the spotlight for Gladden President Begelman, who was ousted as Columbia Pictures president in the late 1970s. In what arguably remains Hollywood’s biggest business scandal, Begelman pleaded no contest to grand theft charges stemming from the forgery of $40,000 in checks. He later headed Metro-Goldwyn-Mayer and United Artists.
It is also another setback for McNall, who has been sued by two banks over alleged loan defaults. As previously reported, McNall is trying to sell 65% of his Los Angeles Kings hockey team in a move largely designed to reduce his bank debt.
McNall reduced his stake in Gladden from 50% to 10% in 1988. Begelman now owns 50%, with the rest held by foreign investors. A spokesman on Wednesday said McNall has not been actively involved with Gladden for several years, saying, “Neither Mr. McNall nor any of his entities have any liability with regard to this matter.”
Calls to Gladden were not returned.
Guild sources said Gladden has failed to file quarterly residuals reports for more than a year, and scrapped arbitration proceedings scheduled for March 28. In correspondence, Gladden executives have disputed the amount owed, and said that the guilds should be dealing with the French-owned bank Credit Lyonnais because the bank “has a lien on all of the assets of Gladden.” Sources familiar with the company say Gladden owes the bank $90 million.
The joint move by the Screen Actors Guild, the Writers Guild of America and the Directors Guild of America is an unusually harsh action to enforce rules requiring producers to pay residuals. The guilds said that its audits showed Gladden owes $2.5 million to actors and owes more than $1.6 million to writers and directors.
Founded in 1984, Gladden produced such films as “The Fabulous Baker Boys,” “Weekend at Bernie’s” and “Mannequin.” But the company hit a cold spell in the 1990s with such films a “Short Time” and 1991’s “Mannequin II: On the Move,” the last Gladden film released.
At the Cannes Film Festival last year, Begelman announced that Gladden would return with a 10-film, $150-million distribution deal with Metro-Goldwyn-Mayer, Live Entertainment and Rank Film Distributors.
20th Century Fox, the Hollywood studio, has attached McNall’s assets because he personally guaranteed nearly $5 million in advances Fox claims Gladden owes because of the dismal performance “Mannequin II.” Recent court documents in that case show that the lawyers defending Gladden have withdrawn from that case because they were not paid.
Meanwhile, McNall’s deal to sell 65% of the Kings to Jeffrey P. Sudikoff of Culver City-based IDB Communications Inc. and associate Joseph Cohen is expected to close within a week, according to Sudikoff. Details involving the $60-million transaction are being finalized. One of the remaining steps is an interview with NHL Commissioner Gary B. Bettman, who is in Los Angeles this week.