Planet Hollywood Forgave Celeb Loans
ORLANDO, FL (AP) -- Planet Hollywood International Inc. wrote off $5 million in loans to celebrities and cre-ated a "tangled web" of insider deals that benefited top executives and other insiders, an independent review of the bankrupt company shows. The once high-flying restaurant company, which counted Arnold Schwar-zenegger, Bruce Willis, Demi Moore and Sylvester Stallone as celebrity backers, is now struggling to emerge from bankruptcy for a second time in two years. The independent examiner's report, ordered by the court at the request of the company's unsecured creditors who are owed $20 million, was filed Monday in US Bank-ruptcy Court in Orlando. The names of celebrities who had loans forgiven weren't made public. The examiner, Soneet R. Kapila, criticized Planet Hollywood's founders, CEO Robert Earl and Keith Barrish, for being too chummy with the celebrities. "It would appear that both Earl and Barrish were more concerned with preserving their personal relationships with the celebrities at the expense of the business, creditors and shareholders," Kapila wrote. The Orlando-based company might have been able to recover the loans if executives hadn't de-cided to write them off, the 57-page report said. The celebrity backers had been given shares of Planet Holly-wood when the company went public in 1996, but many of them later wanted to divest their shares. To avoid bad publicity from celebrity sales, Planet Hollywood helped the celebrities arrange loans secured against the company's stock. Later, the company "effectively stepped into the shoes of the financial institution" and posted the full value of the loans, the report said. A legal analysis is needed to see whether the loans constitute fraud or whether there was management misconduct on other matters. Earl described the arrangements as "a very complex ownership structure" and added there was nothing wrong with them.
ORLANDO, FL (AP) -- Planet Hollywood International Inc. wrote off $5 million in loans to celebrities and cre-ated a "tangled web" of insider deals that benefited top executives and other insiders, an independent review of the bankrupt company shows. The once high-flying restaurant company, which counted Arnold Schwar-zenegger, Bruce Willis, Demi Moore and Sylvester Stallone as celebrity backers, is now struggling to emerge from bankruptcy for a second time in two years. The independent examiner's report, ordered by the court at the request of the company's unsecured creditors who are owed $20 million, was filed Monday in US Bank-ruptcy Court in Orlando. The names of celebrities who had loans forgiven weren't made public. The examiner, Soneet R. Kapila, criticized Planet Hollywood's founders, CEO Robert Earl and Keith Barrish, for being too chummy with the celebrities. "It would appear that both Earl and Barrish were more concerned with preserving their personal relationships with the celebrities at the expense of the business, creditors and shareholders," Kapila wrote. The Orlando-based company might have been able to recover the loans if executives hadn't de-cided to write them off, the 57-page report said. The celebrity backers had been given shares of Planet Holly-wood when the company went public in 1996, but many of them later wanted to divest their shares. To avoid bad publicity from celebrity sales, Planet Hollywood helped the celebrities arrange loans secured against the company's stock. Later, the company "effectively stepped into the shoes of the financial institution" and posted the full value of the loans, the report said. A legal analysis is needed to see whether the loans constitute fraud or whether there was management misconduct on other matters. Earl described the arrangements as "a very complex ownership structure" and added there was nothing wrong with them.