Relativity Media CEO Ryan Kavanaugh and one of his holding companies have been hit with a lawsuit over a multimillion-dollar defaulted vendor payment, according to documents filed Wednesday in New York State Supreme Court.
RKA Film Financing, in which Kavanaugh owns a 10 percent stake, claimed that the executive and his subsidiary River Birch Fund failed to pay $7.5 million allotted for the promotion of upcoming Relativity releases such as Kristen Wiig’s “Mastermind” and Kate Beckinsale’s “The Disappointments Room.”
In light of the default on payment, which was due June 29, RKA is demanding that Kavanaugh forfeit his 10 percent equity stake in RKA.
“In support of Relativity, River Birch Funds LLC, an entity owned by Ryan Kavanaugh, pledged an equity ownership interest in RKA. Unfortunately, Relativity’s payment to RKA was delayed as a result of the company’s pending refinancing. We expect this matter to be resolved shortly,” a spokesperson for Relativity said in a statement.
Attorneys for RKA, formed in 2014, did not immediately return TheWrap’s request for comment.
Relativity is currently facing a public fight for its life. The embattled indie film distributor is attempting to satisfy nearly $150 million in senior secured debt, TheWrap reported last week, on top of squabbling with subordinated debt holders and attempting to find equity investors to finance ongoing and new film projects.
The Toronto-based firm Catalyst Capital agreed to absorb the $150 million in debt, an individual with knowledge of the deal told TheWrap.
But despite reports last week that Catalyst would also infuse Relativity with an additional $170 million in cash for a long-term recapitalization strategy, the individual said that no equity was involved and that Kavanaugh was afforded 10 days to secure an equity investor for upcoming projects.
Pamela Chelin contributed to this story.