By Stephanie Gleason
Hollywood production company Prospect Park Networks LLC, which
tried to extend the run of soap operas "One Life to Live" and "All
My Children" on the Web, filed for Chapter 11 bankruptcy Monday as
it battles the ABC television network over changes to the soaps'
story lines that it says destroyed the shows.
Prospect Park Networks licensed the rights to the famous soap
operas after ABC announced in April 2011 that it was canceling
them. The companies reached a licensing agreement and then,
Prospect Park claims, ABC sabotaged the shows by pulling characters
into its still-airing "General Hospital" and killing them off or
integrating them fully into General Hospital.
Prospect Park sued ABC in April 2013 and halted its run of the
shows online last August.
One example of ABC's alleged sabotage involved a "One Life to
Live" character named Tea Delgado. ABC brought Ms. Delgado onto
"General Hospital" to have a baby, but didn't tell Prospect Park
the full story line. Prospect Park said it wasn't told the baby
would be stillborn, and unknown to Tea Delgado, switched with a
live baby born to another character and then kidnapped. In another
example, ABC "unilaterally dismantled" a longtime affair on General
Hospital between two popular "One Life to Live" characters,
Prospect Park said.
ABC's actions are "the cause of the company's present financial
woes," said James Maloney of Andrews Kurth LLP, who is representing
Prospect Park in its case against ABC. The production company is
suing the network for up to $95 million in lost profits and has
suffered out-of-pocket losses of at least $30 million, according to
court documents.
The lawsuit against ABC will proceed during Prospect Park's
bankruptcy case and Mr. Maloney said they are pursuing the case
against ABC "vigorously."
ABC didn't respond to request for comment on this story but has
denied the allegations in court documents. Mr. Maloney said they're
looking to go to trial by fall.
The Bankruptcy Code halts pending litigation against companies
who file for bankruptcy. Often companies will file for bankruptcy
for this very reason, as litigation costs and liabilities pile
up.
However, lawsuits can proceed when it is the other way around,
that is, when a company in bankruptcy is suing another company.
This helps maximize value for creditors, a main goal of bankruptcy,
because creditors will also benefit if the company in bankruptcy is
successful in the litigation.
Prospect Park Networks filed for Chapter 11 with the U.S.
Bankruptcy Court in Wilmington, Del. The company claimed assets of
between $50 million and $100 million and debts between $10 million
and $50 million. Prospect Park also produces USA's "Royal Pains"
and F/X's "Wilfred."
Write to Stephanie Gleason at stephanie.gleason@wsj.com