In its clearest sign to date that Jim French (aka Rip Colt), founder and former owner of COLT Studio Group, fears losing everything if Jim Rutherford and life and business partner Tom Settle (doing business as Prowest Media), the current owners of the iconic studio, are allowed to proceed with their bankruptcies, French has filed "a support of motion for relief from the automatic stay" in the United States Bankruptcy Court, Northern District of California. Translation? I, Jim French, as primary creditor, stand to lose not only almost 1.5 million dollars but everything I worked my whole life for if Rutherford and Settle are allowed to successfully file for bankruptcy. But first a little background...
In 2003 Jim French - doing business as Jim French Studios - sold the COLT Studio group to Jim Rutherford and partner Tom Settle for $2,495,000 which included the Colt name and its intellectual property (its intangible assets) and some real estate. Since the studio is in Chapter 11 and both Rutherford and Settle are both each in Chapter 7, we can safely assume that the two probably leined/maxed out up to their eyeballs to acquire the Colt holdings. But how much is COLT Studio group worth now? Well, we know how much it isn't worth. According to Roger A. Kramer, whose name is on the affidavit and who represented Jim French as his accountant during the sale, less and less with each passing year:
"I am informed that the gross sales are the following: 2006 - $3,582,401; 2007 - $2,958,906; 2008 - $2,242,515; 2009 - $1,617,365. I am further informed that Prowest is currently on track to gross only $1,200,000 after 2010."
Clearly, French - who turned 78 this year - has a vested interest in stopping the bankruptcies. His only recourse is to salvage what he can which begs the question: What can he? If only we knew. According to Kramer, Rutherford and Settle - quite pathetically, you might say - have absolutely no idea what their company is worth:
"I have no first-hand knowledge or expertise on the current fair value market of the Colt brand and other intangible assets included in the sale from [Jim French Studios]. However, I note from Prowest's bankruptcy Schedule B, that it values these assets at essentially unknown."
Huh? You don't know what your company is worth? Okay, so I guess we won't find out what caused a company, whose gross profits in 2007 were almost three million dollars, to decline by a whopping 25% to two-and-a-quarter million dollars one year later? Wait, the economy you say? Unlikely. The full brunt of the Great Recession didn't hit until the summer of 2008. And, besides, I seriously doubt the purchases of Colt wickedness were likely among the recession's first wave of victims. Poor DVD sales? Really? To the tune of $250,000 dollars? DVD sales are dying but they're not dead and they're not going away anytime soon. (After all, if they were really that bad, why would one of the most successful gay porn adult sites - RandyBlue.com - enter the market this late in the game?) Was it cocaine, then? Alcohol? High-priced hookers? Spectacularly, insanely expensive productions shot in Hawaii that spared no expense? What??
To be continued.
In the August 12 Colt Bankruptcy trial in Santa Rosa, to everyone's shock, the judge didn't believe Tom Settle's plan to reorganize Colt was feasible and he awarded Jim French all the tangible assets of Colt Studio. Colt's bankruptcy has been halted. So Jim French has his company back, although probably actually retrieving it (and the website info, etc) may be the next big hurdle.
So Settle and Rutherford owe about 2.5 million dollars to Jim French, the IRS and others. They have a new company they've formed called BULLDOG (but not spelled that way) which they claimed is currently worth $50 now but which would contribute $100,000 to Colt's reorganization. The judge didn't buy that and basically said he didn't see any assets available to reorganize Colt. So they have lost the business. French's lawyer said he expects Settle and Rutherford are probably planning to leave the country and skip out on all their debts.
Posted by: ponyboy | August 16, 2010 at 05:01 AM
Wow on the post, whoa on ponyboy's comment. This is a fascinating business story. Where is the Gay and XXX comfortable 60 minutes story!?!!
Posted by: D | August 16, 2010 at 08:24 PM