Embattled German distributor Kinowelt yesterday (Dec 19) filed insolvency proceedings in the Munich courts.
The company described the move as a "precautionary measure" but also said that the move had been triggered by the failure of talks which had been taking place with ABN AMRO Bank over the repayment of a $45m (DM100m) loan.
The insolvency action covers only the parent company and Kinowelt Lizenzverwertungs, its film licence trading subsidiary. According to a statement the Kinowelt Home Entertainment GmbH, Kinowelt Filmverleih GmbH, Kinowelt Filmproduktion GmbH, Atlas Air Film + Media Service GmbH and the Kinopolis multiplex cinemas are unaffected. "The operational business of all these firms is secured," it said.
Although Kinowelt had been negotiating since August with a roster of banks over the rescheduling of its $225m (DM500m) total debts, at the time of the repayment request in November, Kinowelt said that ABN's move came as a surprise and that it would be unlikely to be able to pay. It also warned ABN that if the move was a pre-emptive attempt to get its money back before the company failed, the result would in fact be the opposite effect. "The [Kinowelt] management is convinced that if this happens, the result for the funding banks will be significantly worse".
While the group may have assets and businesses that can be salvaged from the wreckage and company spokesmen describe the court application as "temporary", the protracted and public nature of Kinowelt's downfall has already had an impact on the business. Warner Bros withdrew the film titles that it had licensed to Kinowelt for distribution and took over New Line's Lord Of The Rings, which may have provided the distribution and TV arms with a much needed revenue boost.