Relativity Media has brought its pre-bankruptcy grievances with key lender Colbeck Capital back to light, an updated bankruptcy court filing said Friday.
A corrected disclosure statement in the studio’s plan to emerge from Chapter 11 formally accused Colbeck, ex-Relativity CFO Andrew Matthews and multicultural division president Matt Alvarez of conspiracy and breach of fiduciary duties — all in an effort to sabotage the company’s hopes to refinance its debt and equity.
“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 documents said.
“Colbeck recruited Relativity’s then CFO Andrew Matthews and then president of production Matthew Alvarez to join meetings with investors to further promulgate the false perception that Relativity, it’s Chairman and CEO and Board was aware of and supportive of the Colbeck plan.”
Reps for Colbeck, Alvarez and Matthews did not immediately return TheWrap’s request for comment. Relativity declined to comment on the matter.
“This is legally actionable,” a source familiar with the filing and accused parties told TheWrap.
In mid-July, Relativity CEO and chairman Ryan Kavanaugh accused Colbeck of perpetrating a buyout scheme. Kavanaugh said he was close to securing a $300 million investment from Toronto-based Catalyst Capital, who would absorb $130 million in debt and pump the company with $170 million in cash.
Colbeck thwarted this plan, the CEO said, but exercising a right to buy the senior debt themselves, taking Catalyst out of the equation. At the time, Kavanaugh referred to the strategy as a “malicious witch hunt.”
Read the full corrected disclosure:
Colbeck Capital Management (“Colbeck”), while acting in multiple capacities including while having representation on Relativity’s Board of Managers, while being paid as consultants to Relativity, and while acting as agent for the TLA/TLB facility with significant management and financial oversight powers and duties, breached their fiduciary duties and other obligations and agreements, through a clandestine plan designed to effectuate a change in control of Relativity for their benefit and to the detriment of the company and its other stakeholders. With full knowledge of Relativity’s debt and equity financing efforts, 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. Colbeck recruited Relativity’s then CFO Andrew Matthews and then President of production Matthew Alvarez to join meetings with investors to further promulgate the false perception that Relativity, it’s Chairman and CEO and Board was aware of and supportive of the Colbeck plan. Relativity believes that Colbeck represented to third parties that its efforts were Board authorized and approved, when they were not. As a result of the actions of Colbeck and its co-conspirators, Relativity was unable to conclude its debt and equity refinance efforts and on the maturity date of the Cortland TLA/TLB Facility, over $360 million in debt became due and payable and Relativity was unable to make payment on the Cortland TLA/TLB Facility.