In case you haven’t heard, Blockbuster is in a bad way right now. Now it’s affecting Twilight.
The company filed for Chapter 11 bankruptcy in September, and it has left Twilight film studio Summit Entertainment stranded when it comes to their Eclipse DVD funds.
According to Reuters, Blockbuster owes Summit Entertainment $6.8 million but that the company will not (allegedly, “cannot”) pay it, which will cause Summit (a “small studio”) a “significant hardship.” Apparently, Blockbuster made around $8.3 million off of the Eclipse DVD, and now, because Summit isn’t being paid their due, they’re suing Blockbuster to force them to pay the tab or go into liquidation.
As you know, the Eclipse DVD was released on December 4th.
NOTE: A common question here might be: why would the studio enter into agreements like this knowing there are issues with bankruptcy involved? First of all, there was probably a relationship in place long before the petition/filing (Twilight and New Moon were big releases for the store). Even if not, according to Dallas News, “Summit said it was assured that studios would be paid post-petition bills because new movie releases are the chain’s livelihood.”
As for specific numbers, Home Media Magazine reports:
Summit last November shipped Blockbuster 426,180 DVDs (excluding widescreen) of Eclipse for unit prices ranging from $6 to $20.20 each, in addition to 92,290 copies of the film on Blu-ray Disc (excluding widescreen) for unit prices from $6 to $23.99 each.
Summit . . . claims Eclipse was the fourth-biggest home video release of 2010 . . .
There were also some other films involved, including The Hurt Locker, Robin Hood Unrated, and Red, but The Twilight Saga: Eclipse was the big boy in the matter, naturally.
HMM states, Blockbuster “had agreed to pay [Summit] within 60 days of the title’s Dec. 4 release initial invoices totaling more than $1.6 million.”
Bankruptcy cases are really tricky because, basically, through the system corporations get to reorganize their finances in order to survive whatever downturn they’re experiencing. By filing, they gain protection from creditors who will later be paid in a certain order, the last few on the list usually being the losers of that scenario.
As Reuters states, “Bankruptcy gives companies breathing space to reorganize their debts in part by ensuring suppliers will be among the first paid.”
The question is: Is Summit a supplier or a (secured or unsecured) creditor?
According to an old HMM article (which is not legal precedent by any means, but it’s a good start) concerning other studios, those companies (like Walt Disney, Universal) were considered either secured creditors or suppliers.
This means they favor slightly higher on the totem pole than, say, generic lenders (there’s an entire course on this in law school, by the way). The point is, Summit would at least be up there on the list of those who could suck the blood out of the Blockbuster turnip in bankruptcy, but it could take months for the company to reorganize, and even then there still may not be enough money to pay the sum back.
Forcing a liquidation would be a very smart move, and it will be interesting to see if that is where this thing leads. Could the Twilight film studio bring down the bleeding Blockbuster once and for all? Looks like it just might. It all depends on how the court decides to rule on it.
On a personal note, for those of you who remember the death of Hollywood Video and the thousands of other companies done under by the strong-armed 1990’s Blockbuster – or those of you who suffered from their former $3.95 a day late fee regime – you might agree: it’s the boomerang. Do you feel sympathy? Nah. Hello Redbox and Netflix. Although it would mean less part-time jobs on the market.