Carolco Pictures Inc.

Carolco Pictures Inc says it has filed bankruptcy reorganization plan to liquidate its assets and distribute proceeds valued at $90 million to creditors (S)

SHORTLY BEFORE FILMING BEGAN ON "Cutthroat Island," which quietly entered the record books as the biggest flop in Hollywood history after its release last December, a seemingly unrelated event set the pirate picture off on its race to self-destruction. It wasn't that the lead actor, Michael Douglas, had suddenly quit, that the remaining star, Geena Davis, was struggling to pull out, that the producer, David Nichols, had left, that there was still no real script, or even that work had begun in Malta on one of the most expensive sets ever built, without clear instructions from the absent director, Renny Harlin.

The financially troubled movie producer Carolco Pictures Inc. said yesterday that it would sell its film library, which holds such hits as "Basic Instinct" and "Total Recall," to an affiliate of the French pay television company Canal Plus for $58 million. The deal is subject to certain conditions, including approval by the bankruptcy court, a Carolco statement said.

Andrew J. Vajna, one of Hollywood's more flamboyant producers, is under investigation by a Federal grand jury in Los Angeles that has been examining his tax returns, his production company, Cinergi Pictures Entertainment Inc., disclosed Friday night. Mr. Vajna is best known for producing the "Die Hard" action-movie series. Mr. Vajna also produced Oliver Stone's newest film, "Nixon," and arranged much of the financing for it. The film, which stars Anthony Hopkins as the former President, has been commercially disappointing.

Carolco Pictures Inc. said yesterday that it had filed for bankruptcy protection and agreed to sell most of its assets for $50 million to 20th Century Fox, a unit of the News Corporation. Carolco also said that its chairman and chief executive, Mario Kassar, had resigned as part of the sale agreement. The sale must be approved by the Federal Bankruptcy Court in Los Angeles. Carolco, based in Los Angeles, said the sale of its film library, assets and projects in development would not be enough to offset its liabilities.

Carolco Pictures Inc., whose films include "Rambo," "Terminator 2" and "Total Recall," said today that it would not make interest payments on some of its bonds. The studio, which has been having cash problems, did not disclose how much it owed on the two issues of senior subordinated notes with interest payments scheduled for Oct. 15. It said the affected bonds were 11.5 percent-10 percent reducing-rate senior notes due 2000 and 13 percent-12 percent reducing-rate senior subordinated notes due 1999.

Carolco Pictures Inc. said today that it might not have enough money to repay $14 million outstanding under its credit line with Credit Lyonnais Bank Nederland N.V., or to continue in business. The Los Angeles-based movie company said it was trying to restructure the debt or get an extension on the credit line. The company said that if the debt came due and payable on Sept. 29, it might not be able to pay it.

In another sign that Japanese investments in Hollywood have turned sour, the Pioneer Electronic Corporation said today that it would write off $90 million related to investments in two American film companies. Pioneer, the consumer electronics giant, said in a statement that the move resulted from a re-evaluation of its 41.2 percent majority stake in Carolco Pictures Inc., an unprofitable movie studio, and its 50 percent stake in the home video distributor Live Entertainment Inc. Pioneer has invested $175 million in the businesses since acquiring them in 1990.

Carolco Pictures Inc. and Live Entertainment Inc. said today that merger discussions between the two companies had broken off, just days after the New York Stock Exchange suspended trading in the companies' stocks. Under a merger proposal announced on Aug. 12, Live Entertainment shareholders would own 21 percent to 28 percent of the new company.

Trading in the common stock of Live Entertainment Inc. was suspended yesterday by the New York Stock Exchange. The exchange said that trading in a company that Live Entertainment had planned to merge with, Carolco Pictures Inc., had been suspended on Oct. 5. On Aug. 12, the companies said they would merge, with Live Entertainment shareholders owning a 21 percent to 28 percent stake in the surviving company.