Today’s Page Six (you know you all read it) has an interesting lead article detailing an ongoing feud between Merchant Ivory Productions and actress person incredibly dumb blond, Susan Malick. The column has a numerous juicy tidbits to dwell on (not including the fact you have to be in Wikipedia to be considered a legitimate actress, in my book), two of which are actually pertinent to finance. First, the lead:
April 21, 2008 -- "The City of Your Final Destination" - the new prestige film from Merchant Ivory Productions starring Anthony Hopkins and Laura Linney - may be headed to its own final destination: a court of law.
Fetching blond actress Susan Malick, a longtime friend of director James Ivory ("Howard's End," "A Room With a View"), says that in 2006, she invested $250,000 in the flick in exchange for an associate producer credit and the promise she'd be paid back with interest by June 2007. She used credit cards to pony up the cash.
Ok, an “actress” ponied up $250k in wealth debt for an undisclosed interest rate and the right to call herself an Associate Producer. She played lender to a borrower, who presumably hoped to put the money in a profitable endeavor. The risks and potential profits were undoubtedly unknown to the lender (‘actress’), and better known to the borrower (studio), but she lent anyways. I believe it is safe to assume she was more concerned with the Associate Producer credit than with the actual investment’s payoff probabilities, but that is beside the point. She (stupidly) believed she was being compensated for the risk of the loan.
She also believed she could make more out of the AP credit (an asset) than the person who was selling it. Due to her acting experiences she probably assumed that with this one final asset in place she could derive synergies out of her new actor/producer role.
Also, let us also take a second to think about what the unsecured borrowing costs were on her AmEx. She was attempting to arbitrage a market that was stacked against her from the start–unless the studio was offering her ~30% pa. But that’s just stupid lending and there’s nothing really funny about that.
But Malick, who does not appear in the movie, says she has yet to be paid back. She says she's now being sued by American Express, which she owes $350,000, including interest. To add insult, she's not even getting a film credit.
Ouch.
"It has been a disaster. My credit has been destroyed and I'm living hand to mouth," Malick, who lives in the West Village, told Page Six. "James Ivory was a wonderful friend. But when I call him now he says, 'I can't speak of this,' or 'I have a call waiting.' Little did I know how much contempt for me he could hold in the bone marrow of his body. It breaks my heart."
Her high-powered lawyer, Salvatore Strazzullo, is headed to Manhattan Supreme Court for an injunction to stop the release of the movie, which Ivory directed and is to be previewed at the Tribeca Film Festival.
"To see a struggling actress like this being so taken advantage of is terrible," said Strazzullo. But why is Ivory apparently refusing to repay Malick? His agent, Rand Holston, declined to answer, referring us to Merchant Ivory executive producer Paul Bradley - who did not return our call.
Malick's ties with Ivory go way back. She appeared in "Cotton Mary," co-directed by Ivory's business partner and companion, the late Ismail Merchant. A close pal of Malick told us: "It's very sad. She considered both Ivory and Merchant father figures."
Lesson 1: Wow. It breaks my heart too. And I think I’ve heard this story-line before (there are only twelve plots in cinema after all); only usually it is the unfair “to see a struggling borrower being so taken advantage”. The cognitive dissonance required to see this story any differently than the subprime debacle is incredible. I hope to see this line of questioning from the judge come Malick’s court date:
Judge: You mean you lent money to someone without verifying their creditability and now they’re not paying you back?!
Actress: Yes
Jedge: Those jerks. Wait, did you check any documentation to ensure Jim Ivory could pay you back?
Actress: No. We just assumed that since his previous movies were successful his next one would be too. It was only a short-term loan anyways. He was going to refinance the film after TriBeCa.
Judge: How dare he borrow something he couldn’t repay!? The injustice. The man works at a large company with money everywhere. He has to have some more money lying around. We can’t just let you lose this money. It would negatively effect your credit rating and wealth!
Actress: Totally. That’s why I’ve been saying. Here this guy works at a big mortgage company movie studio and he’s not giving me the money I gave him.
Judge: How did you let this happen? Oh, right, you both assumed that since his movies had done well in the past they would continue to profit? And this one hasn’t profited yet, so he hasn’t paid you back?
Actress: Exactly. I’ve tried contacting him, but he doesn’t want to talk to me.
Judge: And he’s starting to hang up on you? You mean he’s not calling you to see if you can re-structure his debt? Well, I can see that even though you didn’t check any of his documents, you made the loan in good faith, so you’re ok. Let me round up my boys in Washington and see if we can’t get you a big tax break–or better yet, we’ll have them buy up your loan and put the risk on the taxpayers back.
This exchange could be funny if it wasn’t the exact argument going on in DC right now--and if I was a more humorous writer. Only we are chiding all of the lenders for not checking their borrower’s credit, and letting the borrowers off the hook. We have simply reframed the issue. Most people would read today’s Page 6 and feel immediate empathy towards the ‘little girl’ who was taken advantage of by the ‘big bad borrower’. We argue how the lenders were making all these predatory loans, but never how the borrowers were gaming the system. Essentially we have all come down to David v. Goliath arguments in the name of political expedience. If you’re an individual then it doesn’t matter how you screwed up, Uncle Sam will save you; if you’re a corporate entity Barney Frank will be there to hunt you down and kill you.
Could you imagine Countrywide saying “yea, we lent money to people who couldn’t afford it. We didn’t do any due diligence because we figured houses would keep appreciating. Why don’t you go after those lowly homeowners who owe us our money!” Well, yes, but the world would laugh in their faces, claim they lent recklessly, and that it is more important to save the borrowers than the lenders.
Yes, I know this issue is a lot more complex than I am making it out to be. If you are going to scold me for that, so be it, but I ask that you see what a difference a Frame makes.
Lesson two: never stray from your core competency!
This reminds me of the bankruptcy court scene at the beginning of 'It Could Happen to You,' only the waitress in the movie spends most of the scene filling the judge's water glass as she guiltily and charasmatically fields his questions
Posted by: T-will | April 21, 2008 at 05:04 PM
I really feel for this little girl. NOT.
Posted by: Anal_yst | April 21, 2008 at 05:15 PM
For me, it;s one the challenge an individual should face.
Posted by: windshield repair | April 20, 2011 at 01:27 AM