Relativity Media accuses lender of prebankruptcy plot for control

Ryan Kavanaugh, Relativity Media CEO, takes part in a panel titled "Can Hollywood Speak Chinese?" during the Milken Institute Global Conference in Beverly Hills, California April 27, 2015. REUTERS/Mario Anzuoni

By Tracy Rucinski (Reuters) - U.S. film studio Relativity Media LLC is accusing its senior lender and two former executives of a secret plan to thwart its refinancing efforts, a factor that it said in court documents helped lead to its July bankruptcy filing. In a revised disclosure statement for its plan to exit bankruptcy, Relativity said lender Colbeck Capital Management recruited then-CFO Andrew Matthews and production head Matthew Alvarez to sabotage the studio's efforts to refinance debt. The document accuses Colbeck and the two executives of conspiracy and breach of fiduciary duties. According to Relativity, Colbeck went behind the company's back to try to implement its own buyout plan for its own benefit. "Colbeck intentionally diverted sources of equity and debt financing away from the company's efforts and instead sought to have such sources committed to their clandestine plan," the document said. Colbeck, Matthews and Alvarez could not be reached for comment. Relativity, which counts the award-winning "The Fighter" among its films, filed for Chapter 11 protection in July with$1.2 billion of debt after a string of box office flops. Last month, founder and CEO Ryan Kavanaugh sold the company's TV studio to a group of senior lenders for $125 million and struck a deal with other investors to buy back its film, music and sports divisions through a debt-for-equity swap. The plan still needs approval of creditors and a bankruptcy judge. Kavanaugh, who built a career in financing films, hailed Relativity as a "next-generation" studio for financing, distribution, music publishing and sports entertainment when he founded the company in 2004. Since its bankruptcy filing, the company has suffered tensions with Millennium Film, which is co-producing the action thriller "Hunter Killer." The two studios struck a deal earlier this month to keep the project, starring Gerard Butler, afloat. The case is In re Relativity Fashion LLC, in U.S. Bankruptcy Court, Southern District of New York, No. 15-11989. (Reporting by Tracy Rucinski)