Motion Picture Herald (Dec 1932 - Mar 1933)

30 MOTION PICTU RE HERALD February 4, 1933 DETAILS OF PARAMOUNT ACTIONS {Cotitinucd from page 9) mount Pictures Distributing Corporation and Paramount International Corporation — which conduct the business of producing and distributing Paramount pictures. The business of these producing and distributing subsidiaries is profitable and they will continue to manufacture and distribute quality motion pictures under the same management and personnel as heretofore." Paramount Has $166,000,000 in Assets Paramount consented to a petition of the Broadway and Twentieth Corporation, a CaHfornia creditor to the extent of $30,000. The complaint was taken directly to Judge Bondy, who named the receivers after a conference in his chambers in the towers of the Woolworth Building. Under the law a federal judge is empowered to receive such petition. Action was precipitated by Colonel William J. Donovan's law firm of Donovan and Raichle, New York. The corporation, through attorneys Rosenberg, Goldmark and Colin, New York, admitted that it lacked liquid assets with which to meet current obligations, but asserted that it had assets of $166,000,000. The first joint court hearing on the situation will be held Thursday, in New York, when Judge Bondy will preside in the old Post Office Building, at City Hall. The hearing was scheduled for Monday, but was postponed by consent of counsel for bondholders and the corporation. Mr. Zukor and Mr. Hilles are expected to attend, with counsel. Root, Clark and Buckner, of 31 Nassau Street, appointed by the court Monday. Counsel for the corporation will be on hand, headed by Austin Keough, and also various representatives, legal and otherwise, of stock and bond holders' committees. The Broadway and Twentieth petitioner, a San Francisco theatre company, cited rental obligations of Paramount, including that of the Paramount Building, 1501 Broadway, where Paramount's corporation have headquarters, and for which the company pays $807,000 yearly rental. Annual rent for the Brooklyn Paramount Building, amounting to $590,000 was mentioned as another obligation. Both were acknowledged by the corporation, which in its consent to the complaint agreed that Publix has an interest in 1,340 theatres, 1,100 of which are in the United States, and 240 in Canada and abroad. Production and distribution are not affected by the proceedings, according to the corporation, which several weeks ago established separate corporate entities to carry on the activities of each branch. A statement to the trade last Friday said : "These companies are subsidiaries of Paramount Publix Corporation, and are NOT in receivership. They will continue to produce and distribute quality motion pictures under the same management and personnel as heretofore." Subsidiaries mentioned were Paramount Productions, Inc., Emanuel Cohen, vice-president, producer of Paramount product; Paramount Pictures Distributing Corporation, George J. Schaefer, vice-president, distributing unit, and Paramount International Corporation, Emil E. Shauer, vice-president, through which foreign activities are handled. Adolph Zukor is president and Ralph Kohn is treasurer of each company. A fourth unit, created with the others, was Paramount Pictures Corporation. Distribution Will Not Be interrupted Nineteen pictures will be released in the next three months, according to Mr. Cohen, who is presiding over production at Hollywood. Mr. Schaefer called a cabinet meeting of the sales organization immediately after the receivership announcement. He told department heads to flash word to branch managers in the field that the distributing division was in no wise involved. Will H. Hays, president of the MPPDA, who arrived promptly from Hollywood last week, was in communication with Judge Bondy over the weekend, during which Mr. Hays voiced a vote of confidence in the court's decision naming Adolph Zukor as co-receiver with Charles D. Hilles. No one is better qualified to act as receiver for Paramount than Mr. Zukor, Mr. Hays told the court. Thursday's conference before Judge Bondy, scheduled to start at 10 :30 a. m., may have a bearing on the continuance of the co-receivers, who were named temporarily. Judge Bondy indicated on Monday that objections had been voiced against the appointment of Mr. Zukor. Nathan Burkan, well known motion picture attorney, who is said to represent interests holding approximately $1,500,000 in Paramount bonds, told the court at the limited session Monday that his interests approved the appointment of Elihu Root, Clark and Buckner as attorneys for the receivers. Nor were there any objections forthcoming from the forty or more attorneys in court. Among others in the business, Mr. Burkan serves Walter Wanger and Jesse L. Lasky, former Paramount executives whose contracts with the company were matters of legal adjustment. In the meantime, executives along film row expressed confidence upon learning that Mr. Zukor was in charge of the Paramount situation with Mr. Hilles, who is one of America's most widely known political, economic and philanthropic citizens. The application for a receiver for the theatre properties was filed by the circuit's holding company, Publix Enterprises, Inc. Assets of $23,864,076 consists of stock in affiliated circuit corporations and sums due from afiiiliates. Principal creditors are Paramount Publix Corporation, $1,037,247, and Publix Theatres Corporation, $5,748,272. The major liability, listed at $30,952,260, represents guarantees on leases of companies operating theatres. About 73 theatre leases in 50 towns and 21 states are involved. Represented in the contingent obligations are units of Wilby, Fitzpatrick-McElroy, Shea, Blank, Sparks, Southern Enterprises, and others. A Universal Pictures Corporation note for $209,007 is also listed as a liability. Publix's Holdings in Subsidiaries Among the principal individual assets of Publix are stock held in the following corporations by Publix Enterprises, Inc. : Atlanta Enterprises, Inc., $1,015,810; A. H. Blank Theatre Corporation, $1,544,332, and Tennessee Enterprises, Inc., $1,014,004. Other major assets include debts on open accounts from the following sources : A. H. Blank Theatre Corporation, $1,476,915 ; Paramount Enterprises, Inc., $1.236,501 ; Southern Enterprises of Texas, $1,696,636; St. Petersburg (Fla.) Enterprises, Inc., $1,298,350; Toledo Paramount Corporation, $1,020,175. Minor liabilities involving unsecured claims are listed for the following : Augusta Enterprises, Carolina Amusement Co., Charlotte Amusement Co., Montgomery Enterprises, Memphis Enterprises, Publix Indiana, Publix Salt Lake, Imperial Theatre Co., Paramount Publix, Publix Theatre, Savannah Theatres, United Theatre Enterprises, Kansas City Operating Co., Regal Theatres, J. H. Cooper, Lincoln Theatres, all of 1501 Broadway, and Daytona Beach Theatres, Gulf Theatres and Midland Theatres, all of Sparks Enterprises, Lakeland, Florida, and Commercial Investment Trust Co., Wilmer & Vincent, and W. S. Butterfield Theatres, New York. One of the first matters to be attended to by the receivers will be theatre leases. A complete survey of 1,100 leases has been drawn up, and modification or disaffirmance of many are expected to be made part of future proceedings before a bankruptcy referee. Referees are obliged by law to disaffirm such leases if called upon to do so. In similar actions outside of the theatre business, hundreds of leases have been disaffirmed, with resultant savings of hundreds of thousands of dollars. Many Publix theatres are expected to be dropped by the corporation and its receivers. The receivers have six months in which to decide on disaffirming or continuing contracts and leases, but this period may be extended with approval of the court. Paul E. Mead, head of the bankruptcy department of Irving Trust Company, said a complete staff of the bank's representatives had already undertaken a study of Publix's corporate structure and operating activities. Company Will Contest Petitions Many involuntary petitions against Paramount are pending. Directors of the corporation said they will contest such actions. The voluntary application for Paramount receivers was speeded on Thursday when an involuntary petition was filed in federal court bv three creditors, Reuben Gelford, I. Riseman and M. Yellou, holders of $4,000 of 20-year SYi per cent sinking gold fund bonds. The bonds are part of an issue of $13,484,000 dated Aug. 1, 1930. The petition alleged that the corporation, while insolvent, on December 10, 1932, with intent to prefer M. E. Comerford, above other and like creditors, transferred to Mr. Comerford theatre properties of substantial \ alue. The court is expected to dispose of this petition on Thursday. Supreme Court Justice Richard P. Lydon, New York, granted the petition of Robert L. Levy, Chicago bondholder of Paramount, for temporary receivership for 23 features, allegedly valued at more than $10,000,000, which, it was said. Paramount dejivered to Film Production Corporation. This subsidiary, claimed the petitioner, acquired the pictures in violation of the rights of bondholders and the agreement by Paramount not to alienate any of its property that constituted a security for its bonds. The suit also named Chase National Bank, as trustee of $13,000,000 of per cent bonds, issued in 1930, and the Film Production Corporation. Justice Lydon reserved appointment of receivers, pending a trial. Films covered in the receivership, some of which carry working titles, and the sums spent on production, are ; "One Hour With You," "Merton of the Talkies," $1,135,000 $159,000 "The Broken Wine," "Horse Feathers." $462, $300,000 000 "The Miracle Man," "On Your Mark." $125, $469,000 000 "Sensation," $321,000 "Lives of a Bengal Lan "This Is The Night," cer," $100,000 $335,000 "Love Me Tonight," "Sky Bride," $250,000 $580,000 "The World and the "The Challenger," $162. Flesh," $417,000 000 "Sinners in the Sun," "Bride of the Enemy," $228,000 $154,000 "Strange Case of Clara "Ten Commandments," Deane," $182,000 $79,000 "Thunder Below," $382, "Siren and Triton s." 000 $208,000 "Jerry and Joan," $189, "Velvet," $334,000 000 "Countess of Auburn," "Come On. Marines," $19,000 $177,000 Paramount organized Film Production Corporation, it was conceded, and then turned over the pictures to it, accepting its notes for $13,875,000 in return, and endorsing them over to a group of banks to pay $9,600^000 due them on March 28, 1932, and to serve as collateral for $4,000,000 additional capital required to finish the films. The Banking Situation Ralph A. Kohn, treasurer of Paramount, in opposing the application, said the company owed $9,600,000 last March and that the banks agreed to buy the notes of the subsidiary, endorsed by Paramount Publix, and provide more than $4,000,000 additional. The banks, with the (Continued on following page)