Lawyers Prepare to Sell Girls Gone Wild Brand

Why bother to start a porn empire from scratch when you can buy one of the industry’s most established brands—Girls Gone Wild—out of bankruptcy instead?

Sixteen years after the company’s founding by Joe Francis, a team of bankruptcy professionals put in charge of Girls Gone Wild’s holding company by a federal judge have begun to look for buyers for the soft-core pornography business. The Los Angeles company, which made a name for itself by catching impaired co-eds on spring break, distributes its porn through pay-per-view channels, DVDs and the Internet.

The attorneys, under direction of the company’s Chapter 11 trustee and former Federal Bureau of Investigation agent R. Todd Neilson, have already approached officials at adult film-giant Vivid Entertainment, though executive Bill Asher told Bankruptcy Beat that he’s not interested for now. Attorneys have said in court papers that they plan to market the brand to bidders who might eventually compete at a bankruptcy auction.

Lawyers haven’t put a price on the Girls Gone Wild franchise yet. Mr. Francis said earlier this year that the Girls Gone Wild brand is worth more than $80 million, though court papers show that its holding company posted a profit of a little more than $500,000 on $2.4 million in sales since its February bankruptcy filing.

Girls Gone Wild, made famous in a humble era of low-budget, late-night infomercials in the late 1990s, has a loyal subscriber base, according to Mr. Francis.  In an interview earlier this year, Mr. Francis said that free porn that competes with Girls Gone Wild is “crap” and puts viruses and tracking software on visitors’ computers.

The effort to sell the Girls Gone Wild brand has angered the founder, and he hasn’t been shy in sharing his thoughts with the trustee and his attorneys. In an email chain last month related to the brand’s possible sale, Mr. Francis sent this profanity-laden message. (See page 17.)

Mr. Francis sent the note to Mr. Neilson and a group of lawyers who successfully banned him from the company’s headquarters earlier this year after raising concerns that his interactions with employees could turn violent.

But there’s a legal foundation to Mr. Francis’s protest: His attorneys have asked the court to stop the sale efforts from advancing while they challenge a legal decision that will allow Mr. Neilson to pull Girls Gone Wild’s intellectual property back into the company’s bankruptcy estate.

Earlier this year, Mr. Neilson won permission from a bankruptcy judge to transfer the Girls Gone Wild trademarks, copyright and website names back into Girls Gone Wild’s holding company from a West Indies-registered company that owned them and licensed the brand’s use. The intellectual property includes dozens of website domain names, including www.wildestsexever.com and www.blackgirlsgonewild.com.

Mr. Neilson argued that the West Indies company did not pay a fair price when it took possession of the intellectual property, but Mr. Francis has asked a U.S. District Court judge to review the case, arguing that Mr. Neilson didn’t have the power to put a company called GGW Marketing LLC into bankruptcy during his asset-recovery process.

In court papers, Mr. Neilson said that the West Indies company was part of a web of offshore entities used by an asset-protection specialist who handled the Girls Gone Wild entities as Mr. Francis was pressured to pay up on old gambling debts.

Four of the companies behind Girls Gone Wild’s operations filed for Chapter 11 protection on Feb. 27 to block Las Vegas entertainment kingpin Steve Wynn and his resort company from taking the companies’ assets as repayment for Mr. Francis’s $2 million in gambling debts. Over the years, that debt and other dispute-related costs—including a judgment from a defamation lawsuit—climbed to more than $30 million.

The bankruptcy filings stopped the collection efforts, but company managers later lost control of the operations when a bankruptcy judge determined that they needed new leaders to put together a debt-repayment plan.

Since the leadership change in April, Mr. Francis has accused Mr. Neilson, who is Mormon, of leading a “moral personal crusade” to destroy the company.

Write to Katy Stech at [email protected]. Follow her on Twitter at @KatyStech.