Allied Artists Industries Inc., owner of a motion picture company whose fortunes have waned in recent years, filed a voluntary bankruptcy petition in New York yesterday.
A major creditor of the company is Washington public relations man Ernest Johnston, who recently filed a federal court suit here that claimed $117,900 in overdue bills.
In response to the Johnston suit, U.S. marshals have seized more than 1,000 Allied film prints here. Old films apparently account for the bulk of the remaining assests of Allied Artists Pictures, a subsidiary of Allied Artists Industries since a merger in 1976.
In the Chapter XI bankruptcy action yesterday, Allied said its Apollo Co. subsidiaries are not involved. An attempt will be make to reorganize the other units-Allied Artists Pictures, Allied Artists Television and Allied Artists Video, D. Kaltman & Co., an Allied-owned pharmaceutical distribution firm, halted operations earlier.
Non-entertainment business lines were added in the 1976 merger, and the overall company has been operating at a loss for some time. In the first nine months of the recent fiscal year ended Dec. 29, Allied Artists Industries posted a loss of $3.2 million on revenues of $30.4 million. The motion picture business accounted for $2.6 million of the loss.
In a statement yesterday, Allied said the bankruptcy petition will provide protection from creditors' claims while a proposed plan of reorganizing debts is developed. Creditors apparently rejected Allied pleas for an informal plan to pay off debts. Company officials have not returned several telephone calls in recent weeks about Allied's purported financial problems.
In addition to Johnston, of Washington, trade sources have identified Technicolor Inc. among the creditors. Allied Artists Pictures had liabilities at the end of 1978 totaling more than $14 million, of which more than $5 million was overdue.
At a recent meeting with creditors, Allied officials reportely said the film subsidiary's assets were carried on company books at #11.2 million-representing the initial cost of films, some of which have continuing value for such uses as television.
The 1,000 prints belonging to Allied in Washington were impounded by U.S. District Court pending outcome of the suit. The prints had been stored at a Molitch Film Services warehouse and were transferred to a storage firm, where an appraisal is a progress.
Accordingly to Wall Street analysts of the entertainment industry, Allied Pictures has had little success over the past 20 years. Since 1975, Allied turned out only a handful of films that grossed more than $1 million in an era when huge revenues for single films have become the dominant factor in survival for leading film companies.
The average cost of picture from major companies now is about $6 million compared with $2 million at the start of the decade. One analyst said Allied lacked the ability in recent years to fund blockbuster films that have brought in $10 million, $20 million or-in the case of "Star War"-more than $150 million.
The major successful films from Allied in recent years have included "The Betsy," "Cabaret" and "Papilion."
In Shelby, N.C., movie producer Earl Owensby said recently that he and country music star Arthur Smith, along with other investors, are interested in buying Allied Artists and moving the company from New York to the Carolinas.
Owensby, who produces low-budget films for distribution overseas and at drive-ins, told United Press International the purchase would be a "a multi-million-dollar deal."
Trading of Allied stock and debentures was suspended on the American Stock Exchange.