EXCLUSIVE: Relativity Media CEO Ryan Kavanaugh, fellow investors in the studio led by Joe Nicholas, and its unsecured creditors are preparing to accuse Colbeck Capital of committing fraud and seek $500 million in damages, sources say.
Relativity and Colbeck have agreed to put any complaints into mediation. But the plaintiffs want to take this to the court system and are looking to file in New York, possibly as early as tomorrow.
Kavanaugh has been considering a case like this for months. Colbeck’s principals, Jason Colodne and Jason Beckman, “executed a clandestine scheme” to buy the company for themselves and thwart Ryan’s attempts to buy the company himself, the company will allege.
Early last year Colodne and Beckman spent two months diverting new investors from Relativity, even though they had been paid $6 million to advise the studio, the complaint will allege we’re told.
Colbeck met with former Relativity EVP Matt Alvarez and CFO Andrew Matthews and told them to dress up the company for potential investors, it adds. Colbeck allegedly told them that it was representing the board although the complaint says that neither other board members nor Kavanaugh knew about Colbeck’s plan.
Colbeck had held two seats on the Relativity board after 2012 when it played a key role in a $350 million debt-financing deal that allowed the studio to expand and fund its slate of films. But last May, Kavanaugh accused Colodne and Beckman of rumor-mongering and acrimoniously kicked them off the board.
The dispute comes as Relativity looks to emerge from Chapter 11 bankruptcy protection in early February. It hopes to persuade U.S. Bankruptcy Court Judge Michael Wiles at a February 1 hearing that it can support itself.
But another of the companies it has tangled with, Manchester Securities, told the court in a filing this week that “despite persistent optimistic statements from the Debtors and Kavanaugh at recent hearings, it appears the Debtors continue to lack any committed exit financing.”
A Relativity source says that the company will have the cash it needs before February 1.
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