Bob Yari has announced that Yari Film Group's releasing division has been compelled by court order to go into involuntary Chapter 11 bankruptcy, effective immediately.

It is understood the move followed legal action by four creditors. Yari called the events a 'perfect storm' of tightening credit markets and the Axium bankruptcy, which he said swept millions of dollars from Yari Film Group's payroll accounts.

On Friday [December 12] Yari Film Group laid off staff and suspended its releasing operation. The division is nonetheless moving forward with a limited qualifying run for the crime drama What Doesn't Kill You, which opened last week in New York and Los Angeles, as well as this week's qualifying release of the thriller Nothing But The Truth in the same cities. That film's Kate Beckinsale earned a best actress nomination from the Broadcast Film Critics Association (BFCA) recently.

The company will continue on production on the long gestating Killing Pablo as well as The Governess, which were announced earlier this year.

'Our goal is to aggressively work towards reorganising our debt so that we can become a stronger company,' Yari said. 'In the meantime our production arms are distinct entities with separate financing, which remain unaffected by the legal proceedings. We will go on functioning, making new films, covering our payroll and paying for employee benefits.'