On 28 May, FRU emailed a circular to producers and stakeholders about its dire financial situation. Here we provide the full text.
DATE: 28 May 2007
RE: CIRCULAR TO INTERESTED PARTIES: PRODUCERS
It is with deep regret that we hereby inform you that the FILM RESOURCE UNIT (FRU) is INSOLVENT and, unless a rescue injection of funds occurs within the next few days, the board’s decision to liquidate FRU will proceed to be implemented.
Various strategies and actions in an attempt to rescue the organization have been undertaken over the past months. While some of these efforts have shown positive results and potential solutions, there is nothing substantial or concrete enough at this stage to justify continued operation in a state of insolvency. This situation is the result of various crises that have beset the organization over the last few years, the most critical being:
1. Leadership vacuum between April 2005 and October 2006, lack of handover from previous management to new management and resulting loss of institutional memory.
2. Unpaid debts to SARS among others dating back to 2001 (this was only recently uncovered through and internal audit instituted by FRU’s new management).
3. Delays exceeding 18 months in realizing contracts with donors such as NLDTF (5 million) and license contractors such as SABC and OBE TV.
4. Buyouts of prime/classic African product previously held by FRU by MNet’s African Film Library.
In December 2006, when this situation became evident, FRU approached the NFVF (among others) for assistance. Our approach to the NFVF was unsuccessful as it was treated in the same way as a production “bridging’ loan would have been. This response closed the door for thorough engagement between FRU and NFVF on the implications of FRU’s precarious situation on the industry as a whole. More recently we have approached the DAC, and while there have been informal pledges of support from the various officers with whom we engage, there has been absolutely no formal response so far.
FRU as the custodian of rights on more than 800 South African and African films produced over the past 45 years, has been seeking the best possible solution so as not to lose rights on intellectual property of Africas’ producers with whom we have Distribution Agreements.
In these circumstances, one of the implications of the liquidation of FRU is that FRU will no longer be able perform as distributor. We are however doing everything in our power at the moment to rescue the projects and legacy of FRU into a new initiative and/or host organization before the inevitable wind-up. We hope we can count on your support for our endeavors in this regard.
Dorothy Brislin and Desmond Tsakani Mthembu
on behalf of
film resource unit