The $13+ million dollar loan default which led AfterShock (and its film/tv division) to file for bankruptcy
The company was being sued by its primary lender for defaulting on loan payments, a new filing reveals
As the bankruptcy process for AfterShock Comics proceeds, a new legal document from the company has provided more information on what led to the December 19 Chapter 11 filing.
As part of a December 20, 2022 filing asking the United States Bankruptcy Court to consider the Chapter 11 filings of both AfterShock Comics and Rive Gauche as one singular entity — officially, asking for joint administration of the two cases — new information has come to light about the circumstances that led to AfterShock filing for bankruptcy, and the financial history of the company as a whole.
Why AfterShock and Rive Gauche say they filed for bankruptcy
According to the documents, AfterShock Comics and Rive Gauche’s primary lender is a Delaware LLC called Access Road Capital. In March 2020, Rive Gauche and AfterShock secured an $11,090,000 loan from Access Road. 19 months later in October 2021, the two companies (known collectively as AfterShock Media) went to Access Capital for additional funds “not to exceed… $2,392,000,” with both parties agreeing that AfterShock Comics and Rive Gauche’s assets were to be considered collateral on the loan.
As part of the loan agreement, AfterShock and Rive Gauche were required to make interest payments during September and March in 2021, 2022, 2023, and 2024. The companies also owed principal payments in March 2022, March 2023, and March 2024. At a certain point, those payments stopped being made, according to AfterShock Comics and Rive Gauche.
It’s unclear which payments were missed — the filing says, simply, “the Debtors were unable to make certain Loan payments to the Lender (and several of their other creditors and vendors)” — but the end result is, Access Road declared that AfterShock Comics and Rive Gauche had officially defaulted on their loans.
Indeed, on October 10, 2022, Access Road actually initiated legal action in the California Superior Court to that effect with a breach of contract suit, asking for “judicial foreclosure of personal property security interests” and “recovery of personal property.” The named defendants on that suit are Aftershock, Rive Gauche, Atlantic Screen Company, the Kramer family trust, Jonathan Kramer, Lee Kramer, Martha Kramer, AfterShock Comics co-founders Mike Marts and Joe Pruett, and investor Qureshi Jawad. Notably, all of those defendants show up as named creditors in the bankruptcy filings of AfterShock Comics and Rive Gauche.
AfterShock’s new filing notes that, “Although the Debtors attempted pre-petition to negotiate in good faith to reach an agreement with the Lender, those negotiations reached an impasse.” That part might be important when constructing a timeline of what happened and when; the mention of pre-petition means that AfterShock and Rive Gauche were clearly aware of Access Road’s position, making the September 12 authorization of Lee Kramer to initiate bankruptcy proceedings for both AfterShock Comics and Rive Gauche all the more notable.
Here is a copy of this new filing:
What's being said inside AfterShock Comics
Earlier this week, Popverse was told by a source that AfterShock CEO Jon Kramer had described the bankruptcy filing to some employees as a preemptive move to block a creditor who was going to attempt to take over the company.
While it is perhaps presumptive, it would appear that Access Road Capital — which is apparently owed somewhere in the region of $16,785,928, according to AfterShock Comics and Rive Gauche, made up of the initial loan, the secondary loan, and “asserted default interest” — is the creditor in question, with the “take over” attempt the result of California Superior Court case, which currently has a case management conference scheduled for March 6, 2023.
Currently, AfterShock Comics and Rive Gauche’s separate Chapter 11 filings are being overseen by Judge Martin Barash. Popverse will update on this story as more becomes available.
Keep up to date with the latest developments in AfterShock Comics’ bankruptcy right here.