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A Filmmaker's Finances Face a Court Assault : Entertainment: Francis Ford Coppola remains a magnificent bankrupt. But his latest Chapter 11 filings have been challenged by a major creditor. At stake are his film and vineyard businesses.

June 03, 1990|MICHAEL CIEPLY | TIMES STAFF WRITER

Nothing is simple with Francis Ford Coppola, least of all his bankruptcies.

In the filmmaker's latest pair of Chapter 11 proceedings--and there have been four since 1983--the biggest creditor is longtime Coppola associate Fred Roos.

Roos, a good soldier, has co-produced at least 16 of Coppola's films, from "The Conversation" to "Tucker." He also served as an officer of Coppola's Zoetrope Corp. until after the most recent bankruptcy petitions were filed last January and since has been in New York with the director, helping to finish "The Godfather, Part III" for Paramount Pictures.

According to documents on file with U.S. Bankruptcy Court in Santa Rosa, Coppola or his businesses nevertheless may owe Roos the staggering sum of $53 million, including interest, because two Roos-owned companies hold a $32-million promissory note from Coppola that they purchased at a steep discount from Chase Manhattan Bank in 1983.

But if Roos has a gun to Coppola's head, it is only because the movie director handed it to him: Roos purchased the note with the proceeds of a $5.25-million Chemical Bank loan that was guaranteed by Coppola and his wife, Eleanor.

That peculiar debt between friends--created with backing from Coppola himself--has become the focal point in a bizarre legal dispute that is threatening to destroy the director's blossoming film and vineyard businesses and, according to Coppola's own court filings, may even jeopardize his ability to deliver the long-awaited Mafia epic in time for Christmas.

In the long run, his debt repayment plans might also turn Coppola into a hired gun again, working more for the sake of commerce than art. He claims to have done exactly that in the 1980s, when he paid down earlier debts by making "Tucker," "Peggy Sue Got Married" and "Gardens of Stone" for Paramount and Tri-Star.

Debt Shield

Coppola adversaries have styled the Roos debt a "sham."

They claim that the director devised it as a tax shelter and has relied on its fast-accruing but largely unpaid interest obligation to avoid paying any income tax on more than $13 million in movie income in the past three years.

They further say Coppola, fat with assets, is using the Roos debt to shield his large Napa County estate and other properties from a potentially crippling $8-million court judgment won earlier this year by the Singer family of Canada, who have been dogging him for nearly a decade to repay a $3-million loan that helped finance the disastrous "One From the Heart."

"This is not personal. We've never been angry. We'd like to have settled this a long time ago," Alan Singer, 43-year-old son of Calgary real estate magnate Jack Singer, said of the dispute.

Because creditors vote on key issues in bankruptcy proceedings according to the amount of debt they hold, Roos, apparently Coppola's largest creditor, can outvote the Singers when it comes to decisions about the filmmaker's financial future. Were it not for the Roos debt, moreover, Coppola's assets would far exceed his liabilities, and the Bankruptcy Court might simply order him to sell some property to satisfy the Singers and other creditors.

Coppola and Roos declined through representatives to be interviewed.

But attorneys for the two contend that the Roos promissory note, created as part of an overall settlement of Coppola's massive debt to Chase Manhattan in the early 1980s, is genuine--although Roos never pressed to collect on it before the recent bankruptcies, and Coppola's attorneys say they plan to dispute how much of the obligation remains valid.

Coppola's attorneys add that the Singers are trying to get favored position over legitimate but more sympathetic creditors, such as Roos. "Putting aside the law for a moment, I think you have to ask yourself what's fair here," said Coppola lawyer Michael Ahrens.

In plans filed with the Bankruptcy Court by Coppola and his Zoetrope Productions, the filmmaker proposes to pay his debts over seven years by contributing half his income from a projected six films, among other things. The plans rely on his 15% share of Paramount's receipts from "Godfather III," even though future income is protected from current creditors under bankruptcy law.

"Francis is willing to use his future earning power so that he can have a plan of reorganization with his creditors confirmed," Ahrens explained.

Plea for Peace

Distraught by his financial woes, Coppola recently bypassed his attorneys to approach the Singers with a personal plea for peace, according to individuals familiar with the foray. No settlement has been reached so far, and attorney Robert Chapman, who represents the Singers, said his clients are reluctant to endorse the bankruptcy plans, which they believe will pay them well under 30 cents on the dollar for their debt.

The Singers have asked a Los Angeles Superior Court judge to extend their $8-million award--which Coppola is appealing--to include not just the filmmaker personally but also Zoetrope Corp., his principal holding company.

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