WGAW Settles Residuals Claims Against RHI

In 2009, the WGAW filed arbitration claims against a number of companies, including RHI Entertainment, Inc., Limestone Entertainment, Inc. and Hardstone Entertainment, Inc. The claims sought unpaid residuals and trust fund contributions for more than 65 titles, mostly long form projects made for basic cable. 

Since last spring, the WGAW (jointly with SAG and the DGA) has been engaged in intensive negotiations with RHI Entertainment concerning its plans to reorganize through a Chapter 11 bankruptcy. These were complex negotiations, involving not only RHI but a number of large investment banks and other major creditors. The goal of the guilds in these talks was two-fold: to secure payment of all outstanding residual claims as quickly as possible; and to ensure that the company emerging from bankruptcy is financially able and contractually obligated to pay residuals on a going forward basis. 

We are pleased to report that the guilds have reached a favorable settlement, subject to bankruptcy court approval, that achieves both goals. Under the settlement, RHI will pay off in excess of $4 million in accrued WGA residuals and trust fund contributions in monthly installments over 60-month period.  RHI is also required to pay all future residuals as they come due.

As a first step in implementing the settlement, on December 3, 2010, RHI filed a “prepackaged” Chapter 11 proceeding in bankruptcy court in New York. The case is on a fast track, which means that RHI hopes to exit bankruptcy in the first quarter of 2011. If all goes well, RHI will begin making the monthly installment payments in the first month following its emergence from bankruptcy.