Tuesday, August 26, 2014

Judge Approves Prospect Park's $6M Sale of Connecticut Tax Credits to Apple

A Delaware bankruptcy judge signed off Monday on the sale of roughly $6 million in Connecticut tax credits to Apple Inc. from Prospect Park Networks LLC (PPN), a liquidating Hollywood production company that tried to revive soap operas One Life to Live and All My Children.

The asset transfer was conducted as a private sale under Section 363 of The Bankruptcy Code with Apple set to pay $5.3 million for the tax credits, with the bulk of the money going directly to secured PPN creditor EP Financial Solutions, which had extended a tax credit loan in June 2013, according to court records.

The sale was scheduled to be considered in Wilmington on Monday before U.S. Bankruptcy Judge Mary. F. Walrath, but the hearing was canceled after the court simply entered an order approving the unopposed motion.

“This sale order and the consummation of the sale of the tax credits are supported by good business reasons and will serve the best interests of the debtors, its estates and creditors by maximizing the value obtained,” the order said.

The tax credits come from Connecticut policy that allows multimedia companies to get tax breaks for certain production expenses incurred in the state.

Connecticut offers a 30 percent credit to companies with certain production costs more than $1 million, and PPN said it had nearly $20 million in qualified expenses in 2013, according to court records.

In June 2013, about 15 months before filing for Chapter 11 protection, PPN took out a $5 million loan from EPFS, which was secured by any proceeds connected to the tax credit, in a transaction that included the concurrent sale of the tax credits to computer titan Apple, court records state.

PPN, which filed for Chapter 11 protection in March, is required under the Bankruptcy Code to maximize value for certain transaction, and asked the court Aug. 4 to allow it to consummate the three-way tax credit transaction.

Representatives for PPN did not immediately respond to requests for comment Monday.

After ABC Inc. canceled long-running soaps One Life to Live and All My Children in 2011 and 2012, PPN tried to pick up production on the shows to be shown online.

New episodes for the shows appeared for several months on services such as Hulu and iTunes, but PPN wound up seeking bankruptcy protection, listing between $10 million and $50 million in debts.

The debtor had lodged a lawsuit against ABC in California state court about a year before the petition date alleging the network sabotaged the online revivals.

ABC said it wouldn't interfere with the relaunch, and later asked to borrow some One Life to Live characters to appear on its soap opera General Hospital, agreeing not to introduce any narrative changes that would alter the canon of PPN's programing, according to the lawsuit

But PPN claimed ABC killed several characters and deeply integrated others into General Hospital, and then got the actors to sign exclusive multi-year contracts without the production company's knowledge, the lawsuit said.

PPN is seeking compensatory damages to be determined at trial but not less than $95 million, as well as punitive damages.

Earlier this month, PPN announced plans to wind down and liquidate, saying it has about $3.6 million in undisputed unsecured claims, and $1.9 million in disputed claims.

The latter mostly come from unpaid ABC licensing fees that the production company is challenging in its lawsuit, PPN said.

The talent agency Prospect Park, which the company said is not related to PPN, is not included in the bankruptcy filing, the debtor has said.

PPN is represented by John H. Genovese, Heather L. Harmon and Michael L. Schuster of Genovese Joblove & Battista PA and William E. Chipman Jr. of Cousins Chipman & Brown LLP.

No comments:

Post a Comment