As Relativity Media makes a second attempt at securing an orderly sale process in bankruptcy court, another of its major unsecured creditors has stepped forward to request a delay in the proceedings and to accuse the studio of wrongdoing.
Manchester Securities, one of the original investors in Ryan Kavanaugh’s film company, asked the court to push the second bankruptcy hearing from Tuesday to Friday in an effort to buy more time to solicit competing bids in the proposed sale — saying that by backing an expedited sale Relativity “violated basic notions of due process, fundamental fairness.”
Furthermore, Manchester has accused the studio and its attorneys of “improperly” shielding CEO Ryan Kavanaugh from depositions, saying his testimony would contradict existing accounts of the true value of Relativity and its film, TV and fashion assets.
Relativity responded Monday with its own court filing, saying that Manchester was feigning surprise about the expedience of the sale and attempting to mislead U.S. Bankruptcy Court Judge Michael Wiles.
“Manchester’s last minute attempt to adjourn the Hearing is based not only on faux surprise, but omits material relevant information in what can easily be viewed as an attempt to mislead the Court,” the studio’s lawyers said in response.
As for the calls for Kavanaugh’s deposition, the studio’s filing said “if Manchester believed it needed Mr. Kavanaugh’s deposition testimony before the hearing… it had ample opportunity to pursue it.”
A group of senior lenders — Anchorage Capital, Falcon Investments and Luxor Capital — have a $250 million stalking-horse bid on the table to buy the company’s assets. They, along with other term lenders, filed papers Monday joining Relativity’s objection to adjournment.
The group argued that the mini-major’s value is irrelevant to Manchester, given their “limited rights” as unsecured creditors. The stalking-horse group is a majority debt holder, and owed roughly $361 million from Relativity.
In an earlier notice from the court, Wiles announced that the next hearing would proceed as scheduled at 11 a.m. on Tuesday. The judge is expected to decide on the amended terms of sale and numerous other objections.