Relativity Media Swipes at Financial Backer, Hints at Fraud Claim Ahead of Bankruptcy Hearing

Ryan Kavanaugh’s studio claims would-be investor “is attempting to obfuscate its own failure to perform by shifting responsibility”

Last Updated: October 26, 2015 @ 10:54 AM

Relativity Media went on the offensive Monday, taking a jab at an investor it claims failed to meet obligations in Ryan Kavanaugh‘s attempt to refinance the company’s bankrupt assets — and hinted that the studio would be hit with fraud accusations from the investor.

VII Peaks Capital was part of a consortium of financiers that Kavanuagh assembled for an initial proposal to provide $60 million in cash and absorb $30 million in debt from senior lenders to address an outstanding $125 million loan. The investment didn’t pan out, prompting Kavanaugh to restructure his proposal last week with an offer of $30 million in cash up front, and $60 million in debt.

“VII Peaks Capital is attempting to obfuscate its own failure to perform by shifting responsibility to the investors, including the CEO who worked around the clock to save the company,” a Relativity spokesperson said in a statement Monday. “Since Relativity’s suit, VII Peaks has as much as admitted that they lacked the necessary funding, instead trying to broker third party capital to cover their own shortcomings.”

“We fully expect that their next move will be to concoct some claim of fraud in an effort to disguise the simple fact that they could not close,” the Relativity spokesperson continued. “We have also learned this is not the first time they have misrepresented their capital capabilities and oversight. This does not affect the closing of the deal by the Kavanaugh-led investor consortium that was formally closed and announced last week.”

Relativity has called for the freezing of VII Peaks financial accounts.

Representatives for the San Francisco-based firm did not immediately return TheWrap’s request for comment.

The studio is due back in New York Bankruptcy Court on Tuesday morning. Read the full Relativity statement:

“VII Peaks Capital is attempting to obfuscate its own failure to perform by shifting responsibility to the investors, including the CEO who worked around the clock to save the company. Since Relativity’s suit, VII Peaks has as much as admitted that they lacked the necessary funding, instead trying to broker third party capital to cover their own shortcomings. Indeed, they have requested two months to close on a transaction that they understood needed to close by October 20,” a Relativity spokesperson said in a statement Monday.

“We fully expect that their next move will be to concoct some claim of fraud in an effort to disguise the simple fact that they could not close. We have also learned this is not the first time they have misrepresented their capital capabilities and oversight. The good news is that Relativity, with the support of its stakeholders, was able to preserve the enterprise as a going concern, yet again, notwithstanding these distractions. Of course, VII Peaks maneuvers were not without a cost, and the company and its stakeholders will continue to seek redress for the resulting harm in the courts.”


Keep
Reading...

Looks like you’re enjoying reading
Keep reading by creating
a free account or logging in.