Film studio STX Entertainment expects to file for chapter 11 within weeks if it can’t close its sale to private-investment firm Najafi Cos., an STX lawyer said yesterday, WSJ Pro Bankruptcy reported. The movie business hopes to close its proposed $157 million sale, including debt, next week, but would need to seek bankruptcy “very soon thereafter” if the process stalls, STX lawyer Chad Husnick said in a hearing in the U.S. Bankruptcy Court in New Orleans. “We understand the path forward, we understand our obligations, and we understand the need to close this transaction with alacrity,” Mr. Husnick said. Burbank, Calif.-based STX has already used chapter 11 to protect its rights under a pair of film-distribution deals as it tries to close the sale to Najafi. In February, the company was at risk of losing its distribution rights for the forthcoming sequel to 2020 disaster thriller “Greenland” and elected to shift the contract rights to a corporate subsidiary, which then swiftly filed for bankruptcy. The chapter 11 filing shielded the distribution deal from termination, which was possible after STX failed to meet a contractual deadline to refinance a $150 million credit facility. Then last month, STX moved into bankruptcy its distribution rights to “The Contractor,” a new action film starring Chris Pine, Ben Foster and Kiefer Sutherland that made its debut in theaters last week.
