The letter was issued not long after Magma was obliged to file accounts for 2008. Had it not done so it might have been struck off by the CRO. To be clear, the company concerned is Magma European Scripting House Ltd (MESH) which trades as Magma Films. According to local press it owes creditors €5.5m and made a loss of €4.2m in 2008.
Magma Productions Ltd, a company which shared directors and an address with MESH/Magma Films, changed its name to Tidal Films Ltd back in April, about a month after creditors became aware of the extent of financial difficulties at MESH/Magma Films.
Around the same time the Irish Film Board clarified a number of loan decisions on its website, changing the recipient from Magma Films to Magma Productions. This may have been in response to queries from creditors who wondered how a company in difficulty that had not filed annual returns for three years could still be a beneficiary of loan decisions.
Apparently Magma Films was not a beneficiary of the listed decisions but the inaccuracy might well have inadvertedly given a false impression of the company's well-being.
Tidal Films Ltd (Magma Productions) is currently co-producing Niko 2 - A Family Affair with public funding support from Eurimages, MEDIA, and the Irish Film Board, among others. It is a Finnish/Danish/Irish co-production.
In addition a Section 481 vehicle company, Niko 2/Niko Film Productions Ltd, was established last month to access the tax break for Irish spend on the film, believed to include areas of animation, voice casting and recording, post-sound and original score. Budget is reportedly over €7m.
I have gone into this detail to try to bring some clarification to the confusion that may exist between interelated companies that had similar names and personnel and may have shared offices in Galway.
Indeed there are other interelated companies that may, as occasional co-producing partners outside the jurisdiction, have some bearing on the situation concerning MESH/Magma Films creditors. Ulysses in Belfast and Ulysses GMBH Film-Undfernsehproduktion in Germany, for instance, and Molten Rock also in Germany. (See some of my earlier posts on Magma for more detail).
The main point of the recent letter to creditors from company director Ralph Christians is to tell them that they stand to get nothing if a liquidator is brought in and MESH/Magma Films is wound up. This would result because, the letter maintains, rights in the company's productions would revert to its co-producers if the company were to close.
The letter claims that this is a standard clause in co-production agreements. The upshot is that creditors are being asked to waive interest on the full amount they are owed in the hopes that sales will bring in some revenue if the company is not wound up. I have heard that MESH/Magma Films did something like this previously when some people who worked on The Summer of the Flying Saucer (2007) were asked to waive some of the amount they were owed.
The letter does not state if there is or was any shared corporate relationship - directors or shareholders, for example - between MESH/Magma Films and any of its co-producing partners overseas - partners to whom some of the rights might revert.
Nor does it give an independent valuation of its rights or IP assets and, crucially, it does not detail the extent to which its assets are subject to charges arising from production loans, borrowing, etc. Nor does it state if any rights, assets, properties or shares in other companies have been disposed of by MESH/Magma Films in recent times. In fact it seems unusual that the proposal is being put to creditors without fully up-to-date accounts.
One can add to all the confusion the situation concerning projects like, say, the 'Jack Taylor' adaptations of Ken Bruen novels. The second series, currently airing on TV3 is, I believe, credited to Magma Productions (now Tidal Films) but MESH/Magma Films must have had the rights when it initially received €150,000 in funding from MEDIA (Broadcast) for the project. *(update below) Furthermore, the co-production company is Molten Rock, a related company in Bremen, Germany.
So, which Irish company holds the option and owns the rights to these Ken Bruen books and characters? And if that company were to be wound up would that mean that these rights would automatically revert to the German co-producer - a related company? And could the German company not waive the relevant clause in the co-production agreement?
And a bigger question - if intellectual property assets are commonly heavily burdened with charges and rights in them are ceded to co-producers if a production company is wound up, then surely some of the major planks and processes of public funding policy in the sector have to be re-examined?
In particular, since Magma Films and Little Bird (two of its substantial beneficiaries) have collapsed, the history of the IFB's Company Development Initiative established with Anglo Irish Bank needs to be examined before any scheme of funding is put in place to bolster production company sustainability.
*update
Under the MEDIA scheme Support for Television Broadcasting of European Audiovisual Works Magma European Scripting House received approximately €150,000 for The Guards (aka Jack Taylor) in 2009.
In November 2010 Magma Productions received €384,000 under the same scheme for Jack Taylor: The Pikemen/The Magdalen Martyrs which is the series currently running on TV3. This amount was reportedly 12.47% of the co-finance.
Round 9 of the BAI Sound & Vision fund (June, 2010) included the following decision - Jack Taylor - The Magdalen Martyrs. Magma Films. English. Drama. Contemporary. TV3. €200,000 12% (of budget); 2 x 45 mins
This information is from the officially announced funding decisions. My understanding is that most funders will only offer money to the rights holder. Where creditors would like some transparency is whether or not the rights were initially acquired or optioned in one transaction by one company.
12/Sept/2011 Ralph Christians has emailed me to say, "Magma Productions Ltd was founded seven years ago and produced shows like Paisean Faisean or the animated movie Thor or the Jack Taylor films. The rights for these projects were never in Mesh."
From the series production home page http://jacktaylorfilms.com/contacts/
MAGMA PRODUCTIONS: Clodagh Freeman, Producer,
16 Merchants Road, Galway, Ireland. Tel: +353 (0)91 569142. Fax: +353 (0)91 569148 E-mail: clodagh@magmaworld.com Web: www.magmaworld.com
MOLTEN ROCK MEDIA GmbH: Ralph Christians, Executive Producer
Feldstrasse 58, 28203 Bremen, Germany. Tel. +49 (0)421 69625522 Fax +49 (0)421 69625529 E-mail: ralph.christians@moltenrock.eu Web: www.moltenrock.eu
The full letter follows.
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