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execute its business plan going forward. During the second half
of 1994 and early 1995, Carolco sold substantially all its rights
in such motion picture projects as “Crusades”, “Showgirls”, and
“Lolita” to raise operating capital and reduce payment
obligations. Carolco obtained certain accommodations from its
investors.
After discussions with its present investors and potential
new investors during 1994-95, it became apparent to Carolco that
the necessary additional capitalization required to continue
Carolco’s business plan was not going to be forthcoming.
Consequently, Carolco decided to sell its main film library and
certain other assets in hopes of generating cash with which it
could reduce its debt and pursue motion picture projects.
In October 1995, Twentieth Century Fox Film Corp. (Twentieth
Century Fox) offered approximately $50 million for the Carolco
film library, the projects, and the studio. Although accepting
this offer would have doomed Carolco’s prospects as a going
concern, Carolco decided to pursue the offer and began
negotiating a sale agreement. On November 10, 1995, Carolco and
Twentieth Century Fox executed an agreement providing for the
sale of substantially all of Carolco’s assets for approximately
$47.5 million and requiring Carolco to file a voluntary chapter
11 bankruptcy petition.
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