Archive for February, 2010

Geno Taylor Bankruptcy Day 1

Friday, February 26th, 2010

This shouldn’t be considered a complete and thorough transcript. Listen to the actual audio to clarify any mistakes.

This is a transcript from the Polychrome Pictures bankruptcy case held on January 28, 2010

Notes from me are listed as V-

0:16
David Seror: What is your name sir?
Eugene Taylor: Eugene Taylor
David Seror: Mister Taylor if you’d raise your right hand please. Do you solemnly swear the testimony you are about to give shall be the truth, the whole truth and nothing but the truth so help you god.
Eugene Taylor: Yes.
David Seror: Have a seat please. Are you an officer or director of Polychrome Pictures?
Eugene Taylor: Yes.
David Seror: What office do you hold?
Eugene Taylor: Managing member and President.
David Seror: Did you review the petition and schedules before those documents were filed?
Eugene Taylor: Yes.
David Seror: Is the information contained in the bankruptcy documents true and correct to the best of your knowledge, information and belief?
Eugene Taylor: Yes.
David Seror: Did you list all of the debtors assets and all of the debtors liabilities?
Eugene Taylor: Yes we did.

V- Huh, he didn’t list me.

1:06
David Seror: Did you identify each of its creditors?
Eugene Taylor: Yes
David Seror: Are there errors, mistakes, or omissions in the bankruptcy papers?
Eugene Taylor: Far as I know, No.
David Seror: Has this debtor filed bankruptcy before?
Eugene Taylor: No.
David Seror: You’ve listed as an asset the right to receive fees from distribution of films?
Eugene Taylor: Yes.
David Seror: Are those rights embodies in a document or documents?
1:30
Eugene Taylor: Yes.
David Seror: How many documents are we talking about?
Eugene Taylor: Umm, two?
David Seror: And who are they with?
Eugene Taylor: They’d be with Vivendi, I mean, physically where the documents are located?
David Seror: No who are the contract parties?
Eugene Taylor: Vivendi and InDemand.
David Seror: Vivendi is one, What’s the other one?
Eugene Taylor: InDemand.
David Seror: Alright I’d like you to provide me with copies of those documents please.
Eugene Taylor: K
David Seror: Does this debtor have contractual rights with anyone else other than those two companies?
Eugene Taylor: To my knowledge, no.
David Seror: You did not list any secured debt, have the assets of this company been pledged as security to any lender?
Eugene Taylor: Yes.
David Seror: Is there a reason why that wasn’t listed?
Stella Havkin: [inaudible] cause I wasn’t aware they were secured at the time.
David Seror: Who is the secured party?
Eugene Taylor: National Bank.
2:30
David Seror: And how much is owed to National bank?
Eugene Taylor: I think three thirty five, I’m not sure of the exact amount.
David Seror: When was that loan taken out?
Eugene Taylor: I’m gonna say 06, 07, I’m not sure
David Seror: What was the money used for?
Eugene Taylor: Used for cash flow.

V- According to the Bankruptcy Schedule F, National Bank is owed $323,950.08 from a 2007 credit line. According to the Statement of Financial Affairs section 1 Polychrome grossed $2,826,937.00 in 2007.
Overhead for less than 10 employees, office space, and a phone couldn’t cost more than $400,000 leaving a 2.4 million left over. Why would they need a loan from National Bank when they already have a surplus of $2,400,000.00?

3:00
David Seror: And what is the collateral for that loan?
Eugene Taylor: The assets of Polychrome Pictures
David Seror: All of the assets?
Eugene Taylor: All of the assets. And umm, real estate that belonged to one of the managing members, Wayne Cox.
David Seror: What’s the name?
Eugene Taylor: Wayne Cox, he’s one of the partners and managing members.
David Seror: And his real estate was pledged as collateral?
Eugene Taylor: Yes.
David Seror: Additional collateral?
Eugene Taylor: Two, Two pieces of property of his.
David Seror: Both from him?
Eugene Taylor: Both from him.
David Seror: Do you have the addresses of those properties?
Eugene Taylor: I don’t have them, no.
David Seror: I’d like you to provide me with those loan documents and security documents please.
Eugene Taylor: Sure.
David Seror: Describe for me what this debtor did?
Eugene Taylor: We’re a distribution company. We acquired finished films and we release movies via a partner which normally would be Vivendi in this case.
3:57
David Seror: When did debtor stop operating?
Eugene Taylor: August
David Seror: 2009?
Eugene Taylor: 2009.
David Seror: When was this company formed?
Eugene Taylor: 2004
David Seror: Have you been the managing member since it was created?
Eugene Taylor: Yes. I founded the company, yes.
5:00
David Seror: Could you explain, you’ve listed Vivendi as a creditor in the amount of a hundred seventy thousand dollars for recoupment of advance, what does that mean?
Eugene Taylor: At umm, when we signed our distribution agreement, umm Vivendi umm, we had a legal matter with one of Vivendi’s co-companies, which is Code Black and umm, in settlement of the dispute we agreed to accept two fifty on our books as an advance that never hit our account, that they paid their sister company umm, Vivendi, umm Code Black with and the one seventy five would be the balance of the two fifty, umm part of the agreement umm, they were to deduct twenty five thousand per month from us to recoup the two fifty.

V- Okay this sounds like there was a legal matter between Vivendi, Polychrome and Code Black. Vivendi gave Polychrome an advance of $250,000 in exchange for Polychrome signing its library over to Vivendi. But that money was never handed to Polychrome, instead it was passed on to Code Black. However, Polychrome was still liable to repay the advance back to Vivendi through sales of the library (our films), resulting in a deduction of $25,000 a month.

David Seror: What was the entire amount that Polychrome would have received for that one transaction?
Eugene Taylor: There’s no real answer to that because an advance is negotiated. You’re implying that we would have received an advance from Vivendi. There is no standard.
David Seror: Was there a contractual obligation for Vivendi to pay X number of dollars and then they gave you the advance?
Eugene Taylor: No. There’s no contractual. For, Prior to an agreement or uh, prior to us having an agreement with Vivendi there is no contractual obligation for them to give us an advance. That advance clearly was um derived from, ya know the legal, um lets say, um disagreement we had with Code Black. Um the only monies that they’re required to pay us are from sales of movies that we delivered to them, that they solicit and sell.
David Seror: Was the hundred and seventy thousand dollars a negotiated amount?
7:09
Eugene Taylor: Two fifty was a negotiated amount, yes.
David Seror: So that was my point, so they were supposed to pay you two fifty.
Eugene Taylor: Yes
David Seror: And instead of paying you two fifty, they did what?
Eugene Taylor: They paid us two fifty. Well, well they…
David Seror: [interrupting] Then where did the advance come in?
Eugene Taylor: That’s the two fifty.
David Seror: No it’s a hundred seventy.
Eugene Taylor: That’s the balance of the two fifty.
David Seror: So you did received eighty thousand dollars?
Eugene Taylor: No, they deducted twenty five, umm, umm per month, therefore, to umm, service the two fifty or… we surrender the two fifty, they deducted umm I guess eighty thousand from our books to pay the balance down from the two fifty.
8:08
David Seror: Umm and according to your schedules there were four different litigation matters pending at the time the bankruptcy was filed?
Eugene Taylor: Yes.
David Seror: Five?

V- Actually 6, mine is not listed. Why didn’t they include mine???

David Seror: What was the dispute with Sherman’s Way?
Eugene Taylor: Sherman’s Way was a title that we acquired, I’m gonna say early part of the year, we had an MG, umm, umm which is a Minimum Guarantee umm and we couldn’t service the minimum guarantee.
David Seror: Okay, and what was the litigation with Seskri Productionz?
Eugene Taylor: I’m not familiar… which?
David Seror: Seskri [spelled] S E S K R I
Eugene Taylor: Is there a movie or a title?
David Seror: I don’t know, that’s what it says. It’s pending in the Riverside court in Indio.

V- At the start of this hearing Eugene Taylor claimed to have reviewed the petition and schedules before they were filed and swore the information contained in the bankruptcy documents was true and correct. He said he listed all of the debtors assets, all of the debtors liabilities and identified each of its creditors? He also confirmed there are no errors, mistakes, or omissions in the bankruptcy papers? NOW He doesn’t know who Seskri is?

Eugene Taylor: For??? I… I can only umm, guess umm, we had several… outstanding umm… ya know… dollars that were due to filmmakers, that belonged to them. That we couldn’t service because of our inability to generate income, umm in a very ya know depleted direct to DVD market.
David Seror: Okay.
Stella Havkin: Just for the record, the schedules were amended. National Bank was listed as a secured creditor on December twelfth.
9:52
David Seror: Other than the two contracts you told me about with Vivendi and InDemand, You don’t have distribution agreements with anyone else?
Eugene Taylor: We don’t have any… We don’t have any dis, I, I would need to really look at the records but we don’t have any agreements where we’re actually seeing revenue come in.

V- He’s not sure? How can he not be sure what agreements he’s signed?

David Seror: Regardless, weather there revenue coming in.
Eugene Taylor: [interrupting] I, I understand your question, but but ya know I really, I’m not sure. Really.
David Seror: Okay well I’m gonna continue this then until March 1 at 1:30 and maybe you can get sure between now and then. I’d like you to provide me with the Vivendi and InDemand agreements, umm and if there was a different agreement dealing with the Vivendi advance I’d like that as well. I also want two years worth of bank statements.
UNKNOWN: [interrupting]We don’t have a lot of that

V- What?! You don’t have bank statements????

David Seror: [Continuing] And canceled checks.
Eugene Taylor: Yes
UNKNOWN: If you look in the case documents…
Eugene Taylor: [talking over] From all out accounts?
UNKNOWN: [continuing] …there are a lot of different things that we have, inventory, umm Peter did not… [inaudible] …elements we have and where are they.
David Seror: Does the debtor own any film elements?
11:14
Eugene Taylor: Such as?
David Seror: Any?
Eugene Taylor: We don’t, we don’t necessarily own them.
David Seror: Where are they located?
Eugene Taylor: They should be located in our, umm, in our office.
David Seror: What do they consist of?
Eugene Taylor: Different masters, that, I mean.
David Seror: How many different masters are we talking about?
Eugene Taylor: Could be anywhere between four to five per film
David Seror: What’s the total amount?
Eugene Taylor: Total amount of different masters from each film?
David Seror: No just total masters. Is it a moving truck full, is it a box full?
Eugene Taylor: I would probably… Like seven boxes. Maybe eight.
David Seror: I’m gonna send someone down to pick those up. Umm, alright, creditors? We have time for one or two questions per, so state your name for the record.
12:13
R.A. Anderson: R.A. Anderson for Stella films and Red Doors entertainment.
David Seror: Go head
R.A. Anderson: Question for the debtor is I’d like to know how much compensation did it pay to the principal officers in the year 2008 and 2009? [inaudible]
Eugene Taylor: 2009… maybe ten thousand dollars.
R.A. Anderson: Total?
Eugene Taylor: Total. Maybe.
David Seror: K
R.A. Anderson: And 2008?
Eugene Taylor: 2008 maybe umm, like fifty thousand, maybe. And that’s to all four. Combined.
R.A. Anderson: All four members?
Eugene Taylor: Yes.
David Seror: And were they all employed by the company?
Eugene Taylor: Yes.

V- In 2008 Polychrome grossed $1,497,784.00 and they only paid their 4 officers $50,000. What?! Are these the dumbest business men ever? Subtract office space, phone and electric at maybe $50k a year, and they have 1.4 million left over. What did they do with $1,400,000.00??

David Seror: Next?
Vincent Rocca: My name is Vince Rocca.
David Seror: Whoa, Whoa, Whoa!
Vincent Rocca: Oh Sorry
David Seror: Lets go here next. What’s your name?
Steven Monroe: Steven Monroe, law offices of [inaudible] for secured creditor National Bank of California. Mister Taylor is there any remaining DVD inventory?
Eugene Taylor: Oh yes
David Seror: Where are they located?
Eugene Taylor: Umm, with Vivendi in their warehouse, should be like five hundred thousand pieces.

V- 500,000 pieces??? That is a lot of inventory! How do you end up with that many units sitting in the wharehouse?

David Seror: And who would I contact about getting access?
Eugene Taylor: Tom O’malloy.
David Seror: Who?
Eugene Taylor: Tom O’malloy.
UNKNOWN: You’ve got information… [inaudible]
13:36
David Seror: That’s you?
UNKNOWN: Yes.
David Seror: Perfect. K, one more question.
Steven Monroe: Thank you. Mister Taylor is there any income currently being received monthly from either of the two distribution agreements?
Eugene Taylor: Yes.
Steven Monroe: Is that being received by you? Or through Vivendi then to you?
Eugene Taylor: Not to me, to answer your first question, uh regarding Vivendi I don’t know because as we discussed, we transfer, we forwarded the statement and the contact information from InDemand which is VOD and we informed them to send the monies to the trustee and they’re still trying to locate those dollars now, umm reference to Vivendi, I haven’t received a statement in a month or two but I don’t think they have an outstanding balance with us, so I don’t think there is any dollars coming in.
Steven Monroe: You listed some accounts receivable in Paragraph 16 of your schedule B of four hundred twenty two thousand dollars.
Eugene Taylor: That was a mistake, I don’t know where that came from.

V- Again didn’t he signed and confirmed these bankruptcy documents were correct. Now he doesn’t know where this amount came from? Did his attorney just make it up? Does Eugene Taylor often sign things without reading them? Now he doesn’t know where the amount came from.
Many movies like “Kisses and Caroms” had grossed huge amounts of money, which Eugene Taylor claimed Warner Bros. had reported the numbers to Polychrome, but Warner Bros. was behind on payment to Polychrome.
Mister Taylor also told me that he was still receiving VOD money 2 years after “Jacqueline Hyde” had been released. Now he doesn’t know how much people owe him?

David Seror: What’s the correct amount?
14:34
Eugene Taylor: We had a tough time because you don’t know, umm InDemand umm, you cannot project how much dollars you’re gonna receive because you don’t know what your making until you get a statement. So we put a range in between fifty and a hundred thousand, and I know the most recent statement we received was thirty thousand dollars.
UNKNOWN: That’s from InDemand?
Eugene Taylor: That’s from InDemand, yes.
David Seror: Alright, thank you, next.
Vincent Rocca: Vince Rocca, I represent the movie Kisses and Caroms, I’d like to know if the debtor has filed tax returns for 2004 to 2009?
Eugene Taylor: 2004?
Vincent Rocca: From 2004 to 2009?
Eugene Taylor: Yes, umm 2009 no.
Stella Havkin: We have
David Seror: I have two thousand
Stella Havkin: [cont]five six and seven
David Seror: Yeah five, six and seven
Eugene Taylor: You should have five six and seven, yes.
UNKNOWN: There’s no 2008?
David Seror: Okay, right here.
Eugene Taylor: I don’t think so.

V- No 2008? They do $1.5 million and they don’t file taxes?

15:18
Deon Reid: Deon Reid representing Taylor-Reid Entertainment for the movie Stompin’. I would like to know if Vivendi films has the rights to our films considering our movie did about eight hundred thousand dollars, we didn’t receive anything could we get our title back, do we go directly to Vivendi films to get our title?
David Seror: That you need to deal with me, I don’t think he can answer that and there is somebody here from Vivendi, so you could talk to him but.
Deon Reid: Who’s here from Vivendi?
David Seror: Right here [inaudible] You’ll get your shot, okay, you sir.
15:51
Jeff Taylor: Jeff Taylor, I’m with Stompin’ LLC. I need to know, I’d like to know if any officer or shareholder of Polychrome Pictures has any interest in any other company or corporation?
Stella Havkin: That’s absolute, I’m gonna object on the grounds that absolutely irrelevant.
David Seror: No, Do you have that information?
Eugene Taylor: Do we have interest in any other…
David Seror: [interrupting] Do the members have interest in other entities?
Eugene Taylor: Umm, Yes! Absolutely.
David Seror: Do you?
Eugene Taylor: Yes I do.
David Seror: In the same type of business?
Eugene Taylor: No

V- No? What about Eugene Taylor’s new company Main Stream Pictures with David Williams and Tony Chopelas? Isn’t that the same business? Plus Taylor is Executive producer on 2011’s “The Return of Captain Kidd” how does he afford to fund this movie when he made less than $60k in the last two years?

David Seror: Okay, alright, who’s next? Go ahead.
16:26
Mia Riverton: Mia Riverton representing Read Doors Entertainment LLC. I’d like to know if the debtor has a new office or other address on file for processing summons?
David Seror: The entity is no longer operating is it?
Eugene Taylor: The entity no longer exists, umm we’re no longer operating, um do I
Mia Riverton: [interrupting] I should clarify… [inaudible]
Eugene Taylor: I can speak for myself, um I do have a new place where I’m doing business out of yes. Umm…
David Seror: But don’t say it on the record. We could have that conversation off the record. Anybody else? Going once?
17:01
Larry Weinberg: Larry Weinberg Red Doors Entertainment LLC. Does Polychrome have any banking accounts or assets with any limited partnerships within the United States?
David Seror: Do you mean is Polychrome a member of another limited partnership? Is that your question?
Larry Weinberg: Or an officer?
David Seror: How can Polychrome be an officer?
UNKNOWN: Member.
David Seror: Is Polychrome a member of any other entities?
Eugene Taylor: No
David Seror: To your knowledge?
Eugene Taylor: To my knowledge no.
David Seror: Okay, we have time for… Okay come forward.
17:45
Wayne Terry: Question I have, it’s Wayne Terry for Vivendi. We did have distribution contracts with the debtor, but the films we were distributing are subject to license agreements from the producer to the debtor and there were no license agreements scheduled anywhere in the schedules nor was there anything about those agreements having been terminated and rights returned to the producers in the year prior to bankruptcy.
David Seror: What happened to the license rights?
Eugene Taylor: Ah Ev… [clear throat] We have licensing right, umm, all at, umm are the other office, um we have contracts with every film. I’m not sure if I understand you question, are you saying that we did not turn in um the contracts with the filmmakers? Deliver contracts…

V- The other office? Arcadia or New York?

David Seror: You did disclose in the licensing rights in the bankruptcy documents.
Eugene Taylor: Because we have them, they here, they should be in the office.
Wayne Terry: I mean they’re not scheduled as assets. We didn’t find them.
David Seror: They’re not listed. Okay, Alright So the schedules need to be amended to include the licensing rights.
Wayne Terry: And could we have a list of who they purportedly terminated with in the past twelve or eighteen months?
David Seror: Yes. I would like that as well.

V- Crap! This list will include me. I wonder what that will mean?

Wayne Terry: Thank You.
David Seror: Okay, so we’re gonna continue this to March 1 at 1:30
18:59
UNKNOWN: There’s a few more creditors so. You need to come over here where it’s closer to the microphone please.
UNKNOWN: On behalf of the 13400 Riverside Drive. Umm BellaVic Entertainment. What’s that relationship with Polychrome?
Eugene Taylor: BellaVic Entertainment was the initial LLC that we started. It was a joint Venture between Lightyear and BellaVic and we formed Polychrome Pictures. Eventually we just created, we just became Polychrome. And we folded the two companies into one.

V- According to the bankruptcy documents BellaVic was not folded into Polychrome, actually BellaVic owns 30% of Polychrome and Lightyear owns nothing. Arnold Holland principal of Lightyear is listed as a 30% owner of Polychrome.

UNKNOWN: is anybody operating out of that space?
Eugene Taylor: No, no they shouldn’t be, not to my, I haven’t been there in two months.
Vincent Rocca: I thought that’s where the contracts were?
John Aguirre: I’m John Aguirre…
Eugene Taylor: [interrupting] Umm, I’m sorry the contracts are there. It doesn’t mean that we’re operating from there. I was told to just leave all the assets there and that’s what I did.
19:48
John Aguirre: I’m with the film Utopian Society. I’m the Director Producer. I’m just curious about the accounting from the original revenue stream from Warner Bros. deal prior to Vivendi. Where our title went. Is there any accounting for that?
David Seror: Are there any documents about that?
Eugene Taylor: Yes, umm the same documents that you reviewed. Umm that you came over to review the statements cause you guys did, you conduct an audit before, same documents are available. Umm, We still have, you as a film maker have the ability to audit Warner Bros as well so you can audit their documents to us but it’s the same information.
David Seror: Ya know what, I’d like to know, specifically where all the corporate records are including all the documents and the licensing and everything else.
Eugene Taylor: [interrupting] 13400 Riverside Drive, Suite 301
David Seror: Cause I want to pick everything up.
John Aguirre: I’m looking for further clarification, I’m talking about the deal from Warner Bros. where all our films went out on VOD, InDemand, OnDemand, DVD, I’m talking about that revenue stream. That then goes to Polychrome.
Eugene Taylor: understood, umm, ah
John Aguirre: [interrupting] [inaudible] …what Warner Bros. reported on our film, on other films to Polychrome.
David Seror: Well, those are the documents we’re gonna get our hands on.
Eugene Taylor: So! Once again all of the documents are available at 13400 Riverside Drive, Suite 301. Same documents.
21:11
R.A. Anderson: I filed, I want to ask a question, I want to know about, I serve a… [inaudible] …I filed a 523A already for this case this morning.
David Seror: A 523A? An objection to discharge?
R.A. Anderson: Yes.
David Seror: You need to serve, I don’t know who your defendant is, but I’m not a party to that litigation, so you need to serve the defendant.
Stella Havkin: Corporations don’t get discharges.
David Seror: Okay. Ah March 1 at 1:30, we’ll see what happens.
UNKNOWN: Do we have a phone number to get ahold of…
David Seror: Get a phone number.
UNKNOWN: Can you give us a number that we can [inaudible]
UNKNOWN: Sure.
UNKNOWN: To get the Document and [inaudible] somebody inside to get the public documents.
Eugene Taylor: Yes, but the property owner would know. I think they changed the lock.
UNKNOWN: Who’s the property owner?
Eugene Taylor: He’s the property owner, He’s the lawyer.
UNKNOWN: He’s the property owner, okay, he’s the property owner, lets talk.
UNKNOWN: Excuse me.
UNKNOWN: Put you name down there I’m sorry I didn’t get it in all the crazyness of…
David Seror: I’m trying to get all the documents in one location and then allow people to come in and look at them. But first I need to get them in one location. That’s what we’re gonna do first. Okay?
22:21
Vincent Rocca: The transcript, is that available in the next office over?
David Seror: Next door, they’re closed now but try in the morning.

V- So now I get to review documents. That should be interesting, then I’ll get to go back to court. Yea!