Bad debt plagues film industry

Posted: January 27, 2009 in Investigative articles

©Astrid Stark

Published: The Callsheet:  A trade publication for the South African film industry

 

The South African film industry is riddled with debt as production companies struggle to pay their crew, suppliers and creditors.

One such company is that of Hansie Productions, owned by producer Frans Cronje, who is left with a R36million debt after filming of the much anticipated movie about  the life of Hansie Cronje was completed in November last year.  

Peter Morgan, marketing manager for Frans Cronje’s company Global Creative Studios (Pty)Ltd, said that funding from a Los Angeles-based company fell through halfway during production due to a dispute between a bank and two companies. 

Frans Cronje says that almost all of the post-production work is currently being done at the Waterfront Studios and that, “They have been very gracious in finding solutions for us during the tough last few months.”  

Frans stresses that the large debt has created huge tension towards the end of the film’s production. “Before that we had a fantastic atmosphere on set.”  He says he’s been working day and night to find suitable deals to replace the one that never materialised and explains “It was only much later that the funding deal eventually fell through, so there was no reason to stop production earlier in the process.”

Since creditors met in Johannesburg to vote for or against a Section 311 compromise that would save the company from liquidation, the only creditor that opposed the proposed 311, Greg James Investment Group, has come on board.  Frans says that they have been helping to find solutions. “It is not yet finalised, but we made very good progress in the last few weeks. I can just confirm again what I’ve said before. I am really sorry that the financial situation has put pressure on many industry related people and companies, but I plan on making many more movies and are determined that every person will receive their money.”  

Frans states that he hopes to work with the same team going forward, “as the final result of this movie has really turned out magnificent.”  Frans says that he believes that the key for everyone going forward in SA is that the distributors and producers work together to build a sustainable home industry for movies.  “My personal goals are to produce movies that can sell overseas. Frans says that one of the most valuable lessons he learnt from producing Hansie and Faith like Potatoes is, “never assume that the money will be transferred into your account, even if you have a signed deal.  The other lesson is that nothing is impossible.  No matter how hard you get hit and how many times you fall. You can always get up and continue.”

The release date for the Hansie film is 24 September 2008.

Chameleon Casting has enjoyed 16 prosperous years in the movie industry despite having its own share of headaches.  During the last five years, business has become increasingly frustrating for owner and manager Janice Meyer, due to an accumulation of bad debts. Janice says that Chameleon Casting’s outstanding monies for 2007 amounts to around R100 000.

Janice, who started the National Association of Casting Agencies (NACA), says that there appears to be a prevalent culture of non-payment by some production houses when it came to extras.  “Extras are often seen as less valuable than furniture or clothing and they often cost less to hire,” she says.  “These extras are then sometimes treated poorly and their payment is simply not a priority.” 

According to Janice, The Excellence Factory owes her nearly R20 000 in fees for extras and transport for a Canon commercial shot in March 2007. Janice has now for the second time attempted to issue a summons to owner Amour Setter-Elliot.  Amour admitted that the monies are still outstanding and that she has received a summons – but that it was made out to her instead of The Excellence Factory.  She also says that there is a dispute between herself and Chameleon Casting with regards to the amount owed.

Amour further commented that, “I have spoken with my lawyer and we will be instituting a legal claim against Janice Meyer for defamation.”  Meyer confirms that she has received a lawyer’s letter a few months ago and further said that Amour’s claims are unfounded and it would be vigorously defended should Amour wanted to take the matter further.

Amour has since confirmed that The Excellence Factory has closed down and that she undertakes to repay the company’s debt from her own pocket as soon as she is able to.

 

Jannie van Wyk of Media Film Service says this culture of bad debt extends to the equipment rental companies as well. He says, “Often equipment companies are left as the last or never to be paid creditors, as some people see equipment rental as the lowest priority on their list of creditors.”

 

Media Film Service says R4 million is owed to them and it is more than 120 days late. “And given that the margins are so small, poor payment places enormous pressure on cash flow, and places the viability of our business under enormous permanent pressure.” Says Jannie.

 

Reel Africa has gone into liquidation while owing Media Film around R800 000.00 (excluding interest, legal and other costs).  Media’s Jannie explains, “We would not normally disclose confidential information, but in this case the information is in the public domain and is available. In order to be successful in our claim we would now have to prove that they acted recklessly.”

 

Equipment was supplied over an extended period based on repeated personal promises by Oliver Nurock that it would be paid.

 

Reel Africa was placed in liquidation by its previous director, Anne Nurock in October 2007, and Jannie says that, “accounting records were not up-to-date as required by law, so we have been unable to get any information on how the CC was run and why it became insolvent.”

 

The liquidator who was appointed by Oliver’s attorney, stated in his report of 18 December 2007 that the business had creditors of R4 531 000 and assets of R279 000.  He also stated in the same report a number of sections of the Closed Corporations Act, which might have been contravened placing personal liabilities for debt on members and ex members, including the fact that books and records were not available to verify the financial position. No further information has since been made available and all attempts to contact the liquidator have been unsuccessful)

 

Anne and Oliver Nurock have since engaged the services of an attorney Martin Yudaken who states that, “our clients dispute any personal liability for the debts of Reel Africa, and we have received instructions to defend this claim on behalf of our clients.” Yudaken says that Media Film Service’s attorneys who issued the summons against their clients on behalf of that company are also aware of this fact.  According to Martin Yudaken his client Ann Nurock has taken up a 3 year contract with Grey Advertising in Canada.

 

As a result of no information forthcoming from the liquidator, subpoenas were issued for Oliver Nurock and Anne Nurock to appear before a public enquiry on 23 May 2008 at the Bellville Magistrate’s Court.

 

The enquiry however never took place as the Nurock’s were leaving for Canada.

 

Media’s lawyers recommended that action instead be taken against the members in their personal capacities before they leave South Africa and the SA Court loses jurisdiction.  Summons were issued against Anne and Oliver Nurock on 16 April 2008

 

However it is not all doom and gloom for the industry.  Digby Young of Scriptwright Audition Studio, and his wife, casting director Christa Schamberger, have worked very successfully with two small South African Producers.  Johann Heyn’s company Fevertree Productions cc, that financed, produced and directed,  Hond se Dinges, Hond se Dag – a small Afrikaans movie for release in 2009 – paid Digby’s company the morning after his invoice was sent.  Digby says that it has been an absolute pleasure to work with Johann, “every step of the way.”

 Digby also said that they are casting an ‘in development’ movie to be directed by Revel Fox. The small production company called Shadowy Meadow paid within four days, and were apologetic for the delay.  Digby said they will continue to help with the project because of Shadowy Meadow’s honesty and the professional integrity with which we were being treated.

Digby says, “When new Producers are honest with us about the status of the project, we can go in with eyes open.  What really galls me is being bitten by people who put up the big shot facade when in fact their projects are dangerously underfunded in relation to their high-flown delusions and limited experience.”

END

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