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As Distribber Liquidates, Alleged Failure to Pay Filmmakers ‘Amounts to Theft,’ Lawyer Says

An attorney representing the filmmakers said she's contacted the FBI and the Los Angeles district attorney, requesting an investigation.

Distribber’s website

Distribber

Independent filmmakers who used the aggregator Distribber to get their movies on iTunes and Amazon say they’re owed thousands in royalties as the service faces financial collapse. This week, Distribber’s parent company, GoDigital Inc., sent letters informing clients that the company has opted to liquidate as an alternative to bankruptcy — a process that’s supposed to divvy up the firm’s assets to pay royalty and other debts. Now, an attorney representing one of these filmmakers is calling for a criminal investigation.

Aggregators like Distribber receive filmmakers’ work and, for a fee, will encode and post it on multiple platforms for streaming, rental, or purchase, then collect the revenue and cut checks to filmmakers. Six filmmakers interviewed by IndieWire said they’ve been waiting for as long as a year to receive royalties they’re owed.

Currently, an “assignee” company is handling GoDigital’s affairs during the process known as assignment for the benefit of creditors (ABC). However, a FAQ on the site (GD ABC, dba Distribber Liquidation) offers no clear answer to this question: “What happened to the money GoDigital/Distribber collected from the platforms?”

“The assignee has not performed a forensic accounting of financial records and is focusing first on addressing platform and content concerns,” it reads. “The assignee anticipates conducting a detailed review of cash collections and disbursements as part of its accounting process. In the event the assignee or its experts determine there are transactions that merit an investigation and determines there are adverse findings, the assignee intends to notify creditors.”

The way attorney Jevona Watson sees it, filmmakers’ worst fears have been realized.

“From what I understand, there’s no money,” she said. “When you have an artist who is entitled to 100% of their royalties, what happened to the money? It should have never been in an account where it could have been spent.”

Watson’s client is Dennis L. Reed II, a Detroit director whose work includes the Motor City crime series “I Declare War.” He’s among those who say Distribber stopped reporting revenue and cutting royalty checks within the last year.

Watson said her phone calls to GoDigital leaders eventually went unanswered, prompting her to hunt down principals on LinkedIn. One executive insisted that the company had already paid Reed, but Watson said she collected proof that was not the case, just one instance in a long back-and-forth between the lawyer and representatives from the company. She, along with other filmmakers who say they’re owed Distribber royalties, has also contacted the FBI, the Los Angeles County District Attorney’s Office, and the U.S. Small Business Administration’s Inspector General’s Office.

“Whether it was commingling (of money), whether it was embezzlement, it amounts to theft from the artists because they didn’t get anything,” Watson said.

Cleanup of the GoDigital mess is being handled by restructuring firm GlassRatner. Managing director Seth Freeman did not respond to a request for comment. Nor did former GoDigital CEO Nick Soares, who left his post earlier this year.

A publicist responded to a request for comment from Jason Brubaker, the former marketing executive described as the company’s public face: “His employment at the company ended in May 2019. As a former employee he is under a nondisclosure agreement, so at this time he doesn’t have any further comment.”

Watson says communication has improved since GoDigital hired GlassRatner. The liquidation website states that the process of accounting and determining who is owed will take about nine months, but it offers no guarantees of payment.

Former GoDigital clients are required to file a claim with the company stating what they’re owed. However, filmmakers say Distribber hasn’t offered updated information about any payments made by the platforms, which provide no direct information of their own to filmmakers. Distribber worked with 13 platforms, and the ABC site offers contacts for all of them. None of those representatives immediately offered a response to questions.

Corporate entertainment lawyer Schuyler M. Moore, a partner at Greenberg Glusker, said companies often opt for ABC versus bankruptcy when there are little to no assets to divide. Unlike a judge-supervised bankruptcy, the ABC process is done largely behind closed doors.

“Anytime it’s worth something, they’ll do a bankruptcy,” he said.

“It’s all private, there’s no scrutiny, there’s no trustee, there’s no creditors committee digging through the records,” he added

The recourse? Hire a lawyer.

For her part, Watson sees two options: The costly choice to litigate, or purse criminal charges. She hopes enough people will go to authorities so the matter will pique their interest.

“The only possibility I see is criminal prosecution that would lead to criminal restitution,” she said.

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