Winstar Entertainment, the parent company of New York-based distrib Winstar TV and Video, has voluntarily filed for Chapter 11 bankruptcy protection. The move gives the company time to restructure its balance sheet while continuing with day-to-day operations. A company statement notes that Winstar has arranged for debtor-in-possession financing from a consortium of banks (including Citicorp, Chase Manhattan and CIBC), with an initial commitment of US$75 million.
According to Al Cattabiani, president of Winstar TV and Video, his subsidiary company is not affected by the decision. ‘We are not part of the overall Winstar Chapter 11 [filing]. We are self-funding and a separate corporation, so we’re standing outside the bankruptcy and conducting business as usual.’ Winstar TV and Video – known in doc circles as an arts programming distributor – was established in 1999 as a subsidiary of Winstar New Media, which is, in turn, a subsidiary of Winstar Communications.
While Cattabiani says he believes Winstar Entertainment will rebound, the company’s distribution offspring is taking some precautions. ‘We are arranging independent financing for our business. In the unlikely event that the parent [should go under], we should be fully funded, separate and apart from the parent. Even at that we don’t expect to be affected.’ Cattabiani notes that Winstar TV and Video has sought funding from straight financial, not strategic or operational, sources.
Winstar Entertainment has filed a $10 million lawsuit against partner Lucent Technologies in U.S. Bankruptcy Court. As posted in a recent statement on Winstar’s website, the legal filing alleges that ‘Lucent represented that it had the expertise, personnel, and financial wherewithal to undertake its obligations under the Supply Agreement…Little more than two years into the five-year agreement, Lucent has shown its promises were hollow.’
In a Reuters article, Lucent spokesperson Mary Lou Ambrus is quoted as saying, ‘This lawsuit is absolutely frivolous and without an ounce of merit… We did not breach any of our obligations to Winstar.’