U.S. Bankruptcy Judge Alan Jaroslovsky's approval of the plan allows the company to continue operating and pay Jim French Studios $500,000 in 20 installments to settle claims against the gay studio.
"Confirmation of the [Chapter 11] plan is not likely to be followed by the liquidation or the need for further financial reorganization," Jaroslovsky wrote.
COLT Studio is one of gay adult's oldest operating companies. Jim French, a photographer and adult industry pioneer, founded the company in 1967 and sold the company to its current operators in 2003, which allegedly defaulted on promissory notes used in the purchase of the company.
In addition to its COLT Studio flagship titles, subsidiary labels include Buckshot Productions, Minute Men and Olympus. The extensive COLT branded line of products includes apparel, leather gear and numerous novelties as well as cards, calendars and books.
According to various court documents, COLT's current operators John Rutherford and Thomas Settle had trouble shortly after closing escrow in 2003. By 2008 business for COLT was “seriously declining,” court papers said.
COLT’s parent, Prowest Media Corp., eventually filed Chapter 11 bankruptcy with assets of $105,000 and liabilities of $2.9 million. Its largest creditor was listed as Jim French Studios at $1.49 million.
Later, Jim French Studios brought suit in San Francisco Superior Court because COLT was unable to pay the payments on the original purchase agreement. And to add to the mix, both Settle and Rutherford filed their own personal Chapter 7 cases.
With the settlement agreement signed off by the bankruptcy judge, COLT will be ordered to satisfy Jim French Studios with tight reins.
Jim French Studios will have a stipulated judgment to recover its collateral and obtain other relief in the event of a default. The terms also allow for Prowest's countersuit against Jim French Studios at San Francisco Superior Court to be dismissed.
