Company co-heads Mark Gill (pictured) and Neil Sacker took the decision after they were unable to raise $200m in recapitalisation.
Gill and Sacker were pursuing the money to become a distributor. The company generated $90m in revenues over the last 18 months but had to give the money to lenders under stricter repayment timetables in the wake of the financial crisis.
The three-year-old company said it became profitable and improved its balance sheet by more than $105m in the last year.
“What if you made $90m and your banks wouldn’t let you keep it?” chairman and CEO Gill said. “Basically, that’s what happened to us. We managed to hold on in this impossible position for 15 months, but we couldn’t survive indefinitely.”
“We came within inches of closing our recapitalisation on three occasions, but unfortunately close isn’t good enough,” Sacker, vice-chairman and COO, said. “We’re grateful to everyone — filmmakers, talent, financiers, industry experts and our staff — who contributed considerable time, effort, expertise and capital to the company.”
The Film Department financed and produced Law-Abiding Citizen, a $40m thriller starring Gerard Butler and Jamie Foxx that earned $133m at the global box office.
The company also financed and produced rom-com The Rebound starring Catherine Zeta-Jones and Justin Bartha and love story A Little Bit Of Heaven starring Kate Hudson, Gael Garcia Bernal, Whoopi Goldberg and Kathy Bates. Gill and Sacker are talking to third parties to release both titles.
According to a press release, over the past 18 months The Film Department paid off $40m in senior debt to its commercial banks under customary terms.
The release read: “But in September 2009, in the aftermath of the credit crisis, the company was forced to accelerate repayment of its second-lien notes, which ultimately resulted in $50 million in early payments to a lender. That $50 million would otherwise have been available to the company to fund continuing operations.
“When leveraged with traditional senior debt financing, those funds would have allowed the company to generate another $100 million in production commitments. Previously, the company had paid off its $140 million senior production loan facility in full.”