Penthouse Media Group obtained the assets of Jill Kelly Productions (JKP) on Monday in a two-hour auction in Bankruptcy Court in Woodland Hills.
The winning bid was $1,765,000. Penthouse outbid three other qualified buyers: Playboy Entertainment Group, New Frontier Media and XGen LLC, which is owned by Frank and Michael Kay, who were the initial buyers. The bidding started at $725,000.
Marc Bell, CEO of Penthouse, told AVN.com that the company is very happy with the acquisition. “JKP has a great library, with amazing titles and great talent…as we get closer to launching our own broadcast network, we’re looking to expand our library.” When asked about the price of the acquisition, Bell said that Penthouse “went in there with no expectations.”
The Penthouse owner also explained that, as of right now, the company will be keeping the Penthouse name on the acquired titles, as Jill Kelly retains the trademark on her name. “Penthouse is a name that is known and trusted, worldwide,” Bell added.
XGen's last bid was $1,250,000; Playboy's final bid was $1,285,000 and New Frontier's last bid was $1,755,000. Penthouse was represented by its legal team which did not wish to comment. JKP was represented by attorneys Todd Becker and John Hayes. Jill Kelly was present for a brief time at the proceedings, as was former CEO Philip Starr.
“Penthouse made a really great acquisition. Jill Kelly Productions always put out a quality product and I’m sure Penthouse will have success with it in the future.” Starr told AVN.com. The former JKP CEO was slightly surprised that the assets were obtained at such a high price. "I thought it would go for somewhere around $1,500,000…but the company is worth every penny.”
The assets auctioned included, but were not limited to JKP’s entire adult library and related masters and other footage, accounts receivables, JK Distribution, Inc., and DVD and other inventory.
“It was pretty amazing how high the bidding went,” Aram Ordubegian, counsel for a group of unsecured creditors, told AVN.com. “But it had been our contention all along that [JKP] was worth substantially more than what was initially offered by XGen.” The unsecured creditors committee was appointed by the court.
Ordubegian went on to say that the acquisition was a really great opportunity for any company that could exploit it properly. “Would it have been better if it was a running company that was auctioned off, sure,” offered Ordubegian, “but this was the next best thing, and it was a spectacular result.”
This all comes after Jill Kelly Productions filed for Chapter 11 bankruptcy protection in August of ’05. In the three months leading up to that action, the company lost its former CEO, president, three contract girls and its publicist, among others, and owed millions to secured and unsecured creditors.
Former JKP CEO Bob Friedland fled to New York, sources said, where he has not been heard from since. Former president Jill Kelly left the organization in June of ‘05, and then the company’s final three contract girls, Jenna Haze, Tyra and Nikki Benz, separately announced their departures, followed by publicist Scott Hoover.
All interested bidders had to post a deposit in the form of a certified check payable to the Trust Account of Weinstein, Eisen & Weiss LLP in the amount of $100,000 at least two court days before the auction. The deposits were held by counsel until the conclusion of the auction. Now the deposit from the successful bidder, Penthouse, will be deposited and become non-refundable and the remaining deposits will be returned to the unsuccessful bidders. Penthouse Media Group now must close by paying the remainder of the purchase price 12 days after entry of the order approving the sale. The sale is “as is,” “where is,” with no warranties of any kind.
XGen was JKP's only secured creditor and will still get the $500,000 it is owed.