Broadway Producing Heavyweight Hal Luftig Company Declares Bankruptcy

As last year wound to a close, the Hal Luftig Company, Inc. (which I'll call the "Company" for short), well-known producer Hal Luftig's theatrical production company, filed for Chapter 11. The stated goal is to come out of bankruptcy with a court-approved payment plan to pay off the Company's debts. Meanwhile, Luftig continues to produce.

According to court filings, the bankruptcy was not necessitated by the pandemic, but rather a judgment against the Company and Luftig. In 2019, FCP Entertainment Partners (run by Warren Trepp), a former producing partner of Luftig, filed a claim against Luftig and the Company, arguing, among other things, that FCP was entitled to monies it did not receive related to productions of KINKY BOOTS and the Broadway production of THE ELEPHANT MAN. An amended complaint also accused Luftig of reducing FCP's THOROUGHLY MODERN MILLIE profit share.

Last year an arbitrator found for Luftig and the Company in relation to some of FCP's claims, but still ruled Luftig and the Company were on the hook to FCP for approximately $2.64 million. The arbitrator also granted FCP a 55% share of the Company's future profits related to productions of KINKY BOOTS. (Without getting too into the weeds, the Company owns 15.7315% of the interests in Kinky Boots LLC, the top of the KINKY BOOTS licensing tree, so FCP is to receive 55% of the profits of that 15.7315%.) A court confirmed the award. Luftig is currently appealing on behalf of himself, but not the Company, so the Company is obligated to pay. Except bankruptcy creates a stay, meaning most obligations, including the obligation to pay FCP, are put on hold while the bankruptcy process proceeds. Although Luftig the individual did not apply for bankruptcy, the court granted his application to have the stay apply to him too, allowing him to temporarily avoid dealing with FCP's payment demands.

The court filings reveal various specifics about the Company and the impact of the pandemic on it. The Company reported approximately $150,000 in assets. It still receives funds from KINKY BOOTS, CATCH ME IF YOU CAN, AMERICAN UTOPIA, the Stiles/Drewe musical BECOMING NANCY (which never made it to Broadway), SIX and more. (In the mini-scoop category, Luftig stated in a filing that the Sarah Jessica Parker/Matthew Broderick PLAZA SUITE may hit London and Los Angeles, which would bring money into the Company.)

The Company owes the most money to FCP, then $150,000 plus interest to the U.S. Small Business Administration on a SBA Disaster Loan and $75,000 to an individual, Amy Deutsch, on a loan. In terms of operating expenses, in December, for example, the Company expected to incur expenses of over $73,000 (including a hefty salary for Luftig) and make a $19,500 shareholder distribution to Luftig.

During the theater shutdown, Luftig continued paying the Company's two non-executive employees, but stopped collecting a salary himself. In terms of government money, the Company received approximately $133,830 in PPP loans, $614,069 from the Shuttered Venue Operators' Grant program and the $150,000 that requires repayment. Luftig and his husband also borrowed money from a bank (with their house as collateral) and loaned the Company $450,000. A spokesperson for Luftig stated that Luftig forgave the loan, meaning the Company no longer needs to pay it back.

There is no indication this filing will impact the business of producing or Luftig's future productions, which include Broadway's LIFE OF PI and HERE LIES LOVE.

A spokesperson for Luftig provided the following statement from the producer:

"I am proud to have always conducted my business relationships with the greatest integrity. This corporate reorganization is a response to a simple contractual dispute arising from a unique relationship with a former business partner that dates back to the earliest days of my producing career. The corporate filing allows us to address that situation directly while continuing to produce wonderful new works unrelated to this dispute."