Weintraub Entertainment Group is expected today to file for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code, sources close to the company said Thursday.
Jerry Weintraub, chairman and chief executive, is expected to remain with the Los Angeles company, although his role may change somewhat, one of the sources said.
The independent film company owes about $85 million to Bank of America and Credit Lyonnais Bank Nederland and another $91 million in principal and interest to bondholders. Weintraub Entertainment's chief assets are an extensive film library and some film projects in development.
One individual close to the company said the filing would be made because certain bondholders had threatened to file an involuntary bankruptcy petition. The bondholders fear that in any liquidation, the banks would receive the bulk of proceeds from a sale of the company's assets and bondholders would get little or nothing. The company intends to reorganize and continue to operate rather than liquidating, the individual said.
The company has tried to reduce debt by selling its film library but hasn't attracted an acceptable offer in the currently soft market. The library was purchased two years ago from Cannon Group Inc. for about $80 million.
Weintraub Entertainment was formed in 1987 with $400 million in backing from Columbia Pictures, Cineplex Odeon and others.