Sedgwick Among Law Firms Feeling Exposed in Penthouse Bankruptcy
At least eight firms are collectively owed more than $550,000 in the Chapter 11 filing by Penthouse Global Media Inc.
January 12, 2018 at 08:18 PM
4 minute read
A company that inherited the Penthouse magazine and adult entertainment brand made famous by the late photographer and publisher Robert Guccione has filed for bankruptcy, leaving several large law firms on the hook for thousands of dollars in unpaid legal fees.
Chatsworth, California-based Penthouse Global Media Inc., which was formed in early 2016 after current CEO and majority shareholder Kelly Holland acquired the magazine and related assets in a management buyout from former parent company FriendFinder Networks Inc., sought Chapter 11 protection in San Fernando Valley on Jan. 11.
At least eight firms are collectively owed $556,424.43 from Penthouse, according to a list of the company's 20 largest unsecured creditors. Topping that list is Greenberg Traurig, which is owed $198,776.58, while Akerman is out another $15,000. Both firms previously represented FriendFinder Networks in its 2013 bankruptcy filing, a Delaware case that ended later that year. (Akerman also advised FriendFinder on a $50 million initial public offering in 2011 that generated $7.3 million in legal fees and expenses, according to securities filings.)
Other firms among Penthouse's largest unsecured creditors are Delaware's Bayard ($121,352.53), Hogan Lovells ($57,926.01), San Francisco's Miller Law Group ($46,745.99), Sedgwick ($45,674.83), Florida-based intellectual property and business litigation firm Allen, Dyer, Doppelt & Gilchrist ($38,829.08) and Bressler, Amery & Ross ($32,083.41).
Sedgwick, which dissolved its operations this month, has handled some litigation work for Penthouse through former partner Caroline Mankey, who recently joined Akerman's Los Angeles office. Mankey has been representing Penthouse in a copyright dispute with Academy Award-winning actor Jared Leto.
Michael Weiss and Laura Meltzer of Los Angeles-based Weiss & Spees are advising Penthouse in its Chapter 11 case. The company is based in the Los Angeles suburb of Chatsworth, a part of Southern California known colloquially as Porn Valley. The firm has not yet filed billing statements with the bankruptcy court.
Penthouse's former general counsel, Relani Belous, left the company late last year to become the in-house legal chief at superhero creator Stan Lee's POW! Entertainment Inc., according to her profile on professional networking website LinkedIn. (POW was acquired last year by a Chinese company, while Lee has recently faced allegations of sexual misconduct.)
Started in 1965 by Guccione, who died at 79 in 2010, Penthouse developed a reputation as having a more explicit style than its adult entertainment rival, Playboy Enterprises Inc. Both companies have struggled to remain profitable in recent years, in part due to shifting consumer tastes and an ever-changing media market.
Playboy founder Hugh Hefner kept plenty of his own lawyers busy until his death in September, a little more than a year after the $100 million sale of his famous mansion to billionaire Daren Metropoulos. Holland, Penthouse's latest owner, has said publicly that full nudity in its namesake magazine's pages is a key part of its business model.
Penthouse's plummet into bankruptcy comes a month after Herald Media Holding Inc., owner of the Boston Herald newspaper, filed for bankruptcy in Delaware. Brown Rudnick and Delaware's Morris, Nichols, Arsht & Tunnell are advising Herald Media in its Chapter 11 case, one in which Rochester, New York-based GateHouse Media LLC and Tampa-based investment firm Revolution Capital Group LLC are bidding for control of the newspaper.
According to a list of Herald Media's 30 largest unsecured creditors, the company owes $20,000 to Mintz, Levin, Cohn, Ferris, Glovsky and Popeo. Like Penthouse, in court papers Herald Media listed assets of and liabilities of between $10 million and $50 million.
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