Industry Pro Newsletter: Hal Luftig Company Reorg Plan Approved by Courts, Harry Potter Heads to High School

The Wall Street Journal looks at how regional theatres are finding ways to survive (and thrive) in the challenging post-COVID environment

By: Nov. 27, 2023
Industry Pro Newsletter: Hal Luftig Company Reorg Plan Approved by Courts, Harry Potter Heads to High School

Happy Opening to everyone who opened a holiday show over the weekend! For those that open this week: break a leg! This week in the newsletter, we’ve got a look at how high schools can win a chance to be the first to produce Harry Potter and the Cursed Child, Cara Joy David takes us through the recent ruling in the Hal Luftig Company bankruptcy, and the Wall Street Journal takes a look at how some regional theatres are thriving in a challenging environment.

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Opportunity for High Schools to Produce "Harry Potter and the Cursed Child"

High schools are offered the chance to be among the first to stage "Harry Potter and the Cursed Child." BroadwayWorld provides details on how schools can participate in this unique opportunity, bringing the magic of the wizarding world to student productions.

Broadway/New York

Industry Trends Weekly: Bankruptcy Court Recommends Approving Hal Luftig Company Reorg Plan, With Caveats by Cara Joy David

As his Here Lies Love played its last performances on Broadway, producer Hal Luftig scored a significant victory in court. The Bankruptcy Court of the Southern District of New York recommended confirming the reorganization plan for Hal Luftig Company, Inc. (the "Company" for short). As I previously wrote in February, in filings the Company indicated the bankruptcy was necessitated after FCP Entertainment Partners, LLC received a large judgment against the Company and Luftig, with monies owed now totaling $2,862,776.

Many small business reorganizations are simple and conclude with a brief opinion. The opinion issued in this case was 65 pages and didn’t even render a final decision confirming the plan of reorganization. Why? The FCP judgment.

Under the reorganization plan, the Company’s expert projected FCP would receive $1,022,500, or approximately a 36% recovery, in installment payments spread out over five years. If the reorganization plan didn’t say anything with regard to Luftig individually, FCP could then still go after Luftig for its money. (Luftig has appealed his personal liability in a separate action, but right now he is on the hook.) So the Company's reorganization plan included a provision about a non-consensual third-party release, which purported to release all claims against Luftig individually held by FCP/related parties. In simple words, almost like a get-out-of-jail-free card. Luftig argued that he personally had less than $100,000 liquid cash, $2.2 million in qualified retirement plans, a 1/3 interest in a home valued at approximately $1.15 million, and about a $500,000 interest in a second home. The proposed reorganization plan would be funded partially by $550,000 from Luftig and an agreement from him to pay $100,000 more. So, basically, Luftig argued he couldn’t do both—he would declare personal bankruptcy if he was required to support the Company and pay FCP. He needed a personal release from FCP as part of the Company's reorganization plan.

FCP objected to the plan. FCP argued the filing was an abuse of the system and approving the release would allow Luftig to escape millions in liability. FCP and the U.S. Trustee, which also objected to the plan based on the release, additionally argued that Luftig would get more from the Company than he was putting in. Luftig receives money under the plan, including a $210,000 per year salary and monies related to claims for deferred compensation, loan repayment, and reimbursement of some expenses Luftig already incurred.

But the Court found the release of the FCP claims against Luftig played “an important part in the debtor’s reorganization plan,” giving it the power to release the claims, even over these objections. (The Court's opinion relied heavily on an appellate decision that will be before the Supreme Court next year, but currently remains good law.) According to the Court, the Company's "creditors—including FCP—will receive more under the Plan than in a chapter 7 proceeding, or in the event Mr. Luftig filed for bankruptcy himself[.]"

However, there are some caveats. The release included a “mutual non-disparagement provision”—basically a provision that said FCP couldn’t badmouth Luftig/the Company and vice versa. Obvious why that was in there, but the Court said it shouldn’t be. Likewise, the Court said the release was too broad because it could release potential claims against Luftig unrelated to the Company. It instructed the Company to file a new plan without a non-disparagement clause and with a narrower release.

Even once the Company does that, there is another hitch. The Bankruptcy Court also said it could not finally approve the plan because of the inclusion of the release. That means a District Court will review the Bankruptcy Court’s findings of facts and law “de novo,” so anew, before final confirmation of the plan.

The Bankruptcy Court has said though, as far as it's concerned, the objections to the plan should be overruled and the plan should be confirmed.

“We are thankful that the Court finds that with a few revisions the plan we proposed should be confirmed and the release of Hal Luftig approved,” a spokesperson for Luftig stated. “This is an equitable ruling and we are grateful to the judge for his wise decision.”

We’ll have to wait to see whether the District Court agrees.

Nicki Hunter Assumes Vital Role as Manhattan Theatre Club's Associate Artistic Director

Manhattan Theatre Club has appointed Nicki Hunter as its Associate Artistic Director. This marks a crucial development in the theater's leadership, leveraging Hunter's extensive career in advancing artistic excellence. Hunter brings a wealth of experience, having previously served in various roles at MTC in her 14 years with the company.


Shakespeare Theatre Company Welcomes Rebecca Ende Lichtenberg as Executive Director

The Shakespeare Theatre Company announces the appointment of Rebecca Ende Lichtenberg as its new Executive Director. This decision reflects the company's commitment to leadership that combines artistic insight with administrative expertise, positioning Lichtenberg to play a pivotal role in shaping the future direction of the renowned theater institution.

Wall Street Journal: Nonprofit Theaters Thrive with Innovative Approaches

Some nonprofit theaters in America are thriving through innovative strategies. The Wall Street Journal explores how these theaters are adapting, embracing digital platforms, and finding new ways to engage audiences, ensuring their continued relevance and success in the ever-evolving landscape of the performing arts.


The Guardian: Who Comes First, The Director or the Playwright?

At the Goethe-Institut in London last week, Katie Mitchell (a director who frequently works in both Germany and the UK), used her lecture to lay out a case for a director-centered theatre, which is the German tradition. However, the UK follows a writer-centered tradition. Writing in the Guardian, Michael Billington explores the pros and cons of each.

Missed our last few newsletters?

November 20, 2023 - Con Edison Ends Arts Philanthropy, Voting Now Open for Next on Stage

Happy Thanksgiving Week to our readers in the United States, and Happy Monday to our international readership. As we prepare for the parade (and we’ve got your guide on the Broadway performances below), we also get some good news out of the UK where Panto producers report that ticket sales are trending strongly in the right direction for the holiday tradition.

November 13, 2023 - Fewer Royalties for Broadway Albums, One Year On from NPO Funding Changes

The funding models are changing - we’ve known this for more or less the whole time the industry has been re-emerging from the pandemic, and we’ve seen the struggles of regional theatres large and small as temporary government funding tied to the pandemic came to an end - but how are theatres in England doing one year removed from the largest reshuffle of national arts funding in history? We’ve got that story in the newsletter this week. We also look at the announced closure of Here Lies Love and the shows unusual path to Broadway, while we have a Forbes article looking at yet another change in the business model of Broadway as Spotify changes the formula for distributing royalties to artists.

November 6, 2023 - Banff Centre Board Dismissed, Goodspeed Musicals Crews Join IATSE

More data out last week about the impact of the arts on the economies of the cities and small towns that many regional theatres call home - and the results show that theatre not only contributes to the cultural life of a community, but is contributing significantly to the economic life of many small towns. Additionally, we’ve got stories about the backstage crews at Goodspeed Musicals joining IATSE, and a deeper look at why the full board of the Banff Centre was dismissed earlier this year.

BroadwayWorld Resources

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