MUMBAI: Compelled by a court order issued by the Los Angeles division of United States Bankruptcy Court, the Yari Film Group’s distribution arm was forced into involuntary bankruptcy. Hence, company CEO Bob Yari has placed the distribution division into Chapter 11 reorganisation.

The legal procedure was induced by four creditors who took action against the company after Yari came out on the losing end of legal actions by them.

According to Yari, the reason behind the bankruptcy is the tightening credit markets and the earlier bankruptcy of payroll company Axium, which swept millions of dollars from its payroll accounts. Yari Film Group is currently looking at commencing substantial layoffs and to suspend its releasing activities.

"Our goal is to aggressively work towards reorganizing our debt so that we can become a stronger company. In the meantime, our production arms are distinct entities with separate financing which remain unaffected by the legal proceedings. We will go on functioning, making new films, covering our payroll and paying for employee benefits,” Yari said in a statement.