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VidAngel announces plan to emerge from bankruptcy, says Disney can ‘send us the bill’ on $62 million in damages

A picture of VidAngel’s website. The company announced Thursday its plans to emerge from a bankruptcy filed in 2017 and is ready to pay off $62 million in damages from a federal copyright infringement lawsuit.
A picture of VidAngel’s website. The company announced Thursday its plans to emerge from a bankruptcy filed in 2017 and is ready to pay off $62 million in damages from a federal copyright infringement lawsuit.
VidAngel

PROVO — Video filtering service VidAngel announced Thursday it has a plan to emerge from bankruptcy that includes a 14-year payoff plan for a $62 million judgement levied against the company last year by a federal court jury.

VidAngel CEO Neal Harmon said the company is “stronger than we’ve ever been” and is in a financial position to tell Disney and other plaintiffs in the copyright infringement suit that paying the bill shouldn’t be a problem.

“We would not be in this position today were it not for the support and loyalty of our customers, investors, and the resilient VidAngel team,” Harmon said in a statement. “We’ve gone from avoiding threats of a shutdown to being able to say, ‘Just send us the bill.’”

“VidAngel is turning a page in its history, and we believe that we now are moving forward stronger than we’ve ever been. VidAngel remains committed to helping you, the viewer, make entertainment good for your home.”

VidAngel filed for Chapter 11 bankruptcy protection in October of 2017 in order to pause the federal copyright infringement lawsuit, filed in 2016 by a group of Hollywood movie studios including Disney, Warner Brothers, 20th Century Fox and others, to create space to focus on a Utah lawsuit, later withdrawn, that was seeking a determination on the legality of a new filtering platform.

In the wake of the bankruptcy decision, the company announced that “VidAngel is not going away” and reminded customers (over 100,000 of whom were still owed money and identified as creditors in the bankruptcy filing), that “we have millions of dollars in the bank, and are now generating millions in revenue.”

Thursday’s announcement from VidAngel also stipulated that the company would continue its appeal of the June 2019 decision in U.S. District Court in California in which a jury levied some $62 million in damages against the company.

That ruling came after years of legal wrangling in which Disney, Warner Brothers and 20th Century Fox argued VidAngel infringed on their copyrighted content by ripping copies of movie discs, copying them and streaming them to customers for $1 per movie.

The plaintiffs argued that in some instances, VidAngel was streaming content before it became available on licensed streaming services like Netflix, Amazon Prime and others.

Provo-based VidAngel offers a service that filters out content of movies and television shows that may be objectionable to some viewers like nudity, profanity and violence. The current version of the company’s service works in conjunction with streaming services.

Following the ruling, Harmon voiced his dissent with the outcome and vowed to appeal the ruling.

“We disagree with today’s ruling and have not lessened our resolve to save filtering for families one iota,” Harmon said in a statement at the time. “VidAngel plans to appeal the District Court ruling, and explore options in the bankruptcy court. Our court system has checks and balances, and we are pursuing options on that front as well.”

The damages assessment followed a summary judgement issued in March 2019 by U.S. District Court Judge André Birotte Jr. in favor of the major production companies.

In his ruling, Birotte wrote that VidAngel is liable for copyright infringement and had violated the plaintiffs’ public performance rights. The judge dismissed VidAngel’s arguments that its filtering service was protected by the 2005 Family Movie Act, and found that the company failed to make a viable argument based on fair use law.

“Upon review of the record, the court finds that there are no triable issues of material fact because VidAngel either admitted all of the material facts, or its purported factual disputes are not genuine,” Birotte wrote. “In addition, VidAngel cannot avoid the questions of law that this court and the 9th Circuit resolved against it. Thus, plaintiffs are entitled to summary adjudication that VidAngel is liable for copyright infringement and for violating the (Digital Millennium Copyright Act).”

On Thursday, VidAngels bankruptcy trustee, George Hofmann, said the company has expanded into new lines of business and, thanks to “robust growth,” is set to take care of outstanding debts and move forward.

“Bankruptcy law was established by Congress to give companies a chance to rehabilitate, get back on their feet, pay their creditors, and continue to move forward,” Hofmann said in a statement. “VidAngel has a reorganization plan that does just that. After entry of an adverse judgment in an amount that, initially, seemed insurmountable, the company’s business and revenues are growing, and the company is expanding into new lines of business.

“According to third-party financial experts hired to advise me in the reorganization process, VidAngel’s robust growth makes paying the judgment in full feasible. I look forward to the court confirming a plan so that VidAngel can emerge from bankruptcy, pay its debts and focus on growing a great business.”

While VidAngel indicated in its announcement that no hearing date has yet been set for the bankruptcy court to assess its reorganization proposal, the company anticipates the process will “take a minimum of 60 days.”

VidAngel also noted under the reorganization plan, its investors’ interests “will be preserved and VidAngel’s management and board will control the company moving forward.”

A spokesman for the plaintiffs’ group did not immediately respond to a Deseret News request for comment Thursday evening.