Dividends do not have to come from current profits, or even from current cash flow. But, by law, they must come from capital which is surplus to the company's total liabilities. In other words, assets which belong to the shareholders, not to debtors or creditors. (in very rare cases, companies have declared dividends based on asset values which are not reflected on the balance sheet, but typically they only do so after independent, legitimate third party valuations have been done and court cases brought by the debtholders have been resolved. It usually involves significantly appreciated, and liquid, real estate holdings, so the number of companies that have done that can probably be counted on one hand with a couple fingers left over).
For Epix, if the Hindenburg research is correct, they may have had no actual shareholder's equity to legally pay dividends from. All the company's actual assets may have belonged to the debtors, and then perhaps some to the creditors. They filed bankruptcy because they couldn't repay their massive amount of debt, and the early valuation of the assets is looking bleak for the debtors recovering all they are owed, much less the creditors. If that turns out to be the case, and it is certainly looking that way, then company almost certainly paid dividends they were not legally allowed to pay.
AI
