COLT to Pay Jim French Studios $500,000
Jim French Studios, owned by former COLT owner and founder Jim French, earlier this year claimed it hadn't been paid the bulk of a $2.2 million promissory note related to the sale of the company, which was consummated more than seven years ago.
Both sides plan to meet next Friday in front of a federal bankruptcy judge to modify COLT's Chapter 11 filing and green light the settlement agreement.
French, who wasn't immediately available for comment for this story, earlier this year told XBIZ he was ready to take over the beleaguered company he once owned, but the deal made between the companies apparently settles that issue.
COLT Studio is one of gay adult's oldest operating companies. French, a photographer and adult industry pioneer, founded the company in 1967.
In addition to its COLT Studio flagship titles, subsidiary labels include Buckshot Productions, Minute Men and Olympus. The extensive COLT branded line of products includes apparel, leather gear and numerous novelties as well as cards, calendars and books.
According to various court documents, COLT's current operators John Rutherford and Thomas Settle had trouble shortly after closing escrow in 2003.
Rutherford and Settle “discovered that the existing business and brand was dead, and that the only means to capitalize on the assets purchased was to produce new, contemporary content, while leveraging what little equity remained in the COLT brand."
“[COLT] began to run into difficulty when it was discovered that it was not provided all of the images which it had purchased,” court papers said. “Without the images, it was difficult to produce new packaging, magazines and calendars.”
By 2008 business for COLT was “seriously declining,” court papers said.
“Distributors left the business as did a number of retailers,” COLT said in court papers, noting that it closed its offices in San Francisco and moved business operations to Sonoma that reduced overhead by $20,000 per month.
COLT also said shipping and logistics were moved to Nevada, which resulted in additional savings.
COLT’s parent, Prowest Media Corp., eventually filed Chapter 11 bankruptcy with assets of $105,000 and liabilities of $2.9 million. Its largest creditor is listed as Jim French Studios at $1.49 million.
Later, Jim French Studios brought suit in San Francisco Superior Court because COLT was unable to pay the payments on the original purchase agreement. And to add to the mix, both Settle and Rutherford filed their own personal Chapter 7 cases.
With the settlement agreement ready to be signed off by the bankruptcy judge, COLT will be ordered to satisfy Jim French Studios with tight reins.
Jim French Studios will have a stipulated judgment to recover its collateral and obtain other relief in the event of a default.