Relativity Media Beleaguered in L.A. Courts

LOS ANGELES (CN) — Relativity Media is a financial house of cards that could be about to collapse, according to two lawsuits filed this week in Superior Court.

The beleaguered U.S. media company emerged from bankruptcy protection last year. On Wednesday, its landlord Beverly Place began eviction proceedings, claiming the company owed it $437,452.50 in rent for its Beverly Hills headquarters.

In a separate lawsuit filed the same day, Hollywood executive Adam Fields accused the company’s founder and CEO Ryan Kavanaugh of fraudulent misrepresentation. Fields says Kavanaugh persuaded him to become a co-president in 2015 without revealing the dire state of his company’s finances.

Relativity spokeswoman Sam Kelly said the company could not comment on the claims or the state of the company’s finances.

Beverly Place’s unlawful detainer complaint, filed in Santa Monica, says it served Relativity with a five-day notice of default on Dec. 15, 2016, then served Relativity with a second notice on Dec. 27, without reply. It seeks a court order to evict the media company.

In his lawsuit, filed at the Los Angeles branch, Fields, a former Sony executive, says that when he arrived at Relativity he learned the company was “dysfunctional and woefully under-capitalized.”

He says Kavanaugh froze him out after he hired Kevin Spacey’s producing partner Dana Brunetti, who, Fields claims, physically threatened him. Brunetti is not a party to either lawsuit.

Fields has a decades-long track record in the film business as an executive producer and executive on several Hollywood hits, including “16 Candles,” “Breakfast Club,” “Donnie Darko,” “Limitless,” and “The Wedding Ringer.”

Brunetti was behind Netflix’s “House of Cards,” and the movies “The Social Network” and “Captain Phillips.”

Fields says the extent the company’s problems became apparent when a “big digital initiative” turned out to be an investment in a porn website.

“Following its reorganization, Relativity remained massively in debt and had no real prospects for developing and producing a meaningful slate of films. Indeed, just eight months following its reorganization, Relativity is on the verge of bankruptcy, and Kavanaugh and [Joseph] Nicholas have resigned their positions at Relativity to distance themselves from the sinking ship,” Fields’ 16-page complaint states.

Nicholas helped rescue Relativity after it filed for Chapter 11 bankruptcy in 2015. He is the founder of hedge fund HFR Group and had “already lost tens of millions of dollars in pre-bankruptcy investments in Relativity and had no choice but to prop up the company further in the hopes of recouping his investments,” according to the complaint.

Fields says that before Relativity emerged from bankruptcy, Kavanaugh had run the film studio “off a financial cliff” by “overspending on deals and wasting company money to lavish himself with helicopters, private jets, parties, and extravagant gifts for starlet girlfriends.”

Fields says in the lawsuit that Brunetti made clear his disdain for Fields and physically threatened him an Aug. 30, 2016 business meeting.

“I’ll fucking crush you,” Brunetti said, according to the lawsuit.

Fields says Kavanaugh invented a baseless claim to fire him in September, accusing him of leaking a story to an entertainment reporter during a short ride on an elevator.

“The charge is not only false, but also ironic and incredibly disingenuous given Kavanaugh’s history of obsessively planting stories in the press to further his agendas and vendettas and constantly leaning on Fields to use his good longstanding relationship with the press to do the same,” the complaint states.

Fields and He’s a Rebel Productions seek compensatory and punitive damages for negligent and fraudulent misrepresentation. They are represented by Dale Kinsella with Ella Weitzman Iser Kump & Aldisert.

Beverly Place is represented by Todd Whitman, with Allen Matkins Leck Gamble Mallory & Natsis.

The Hollywood Reporter reported Wednesday that an unidentified spokesperson for Relativity called the lawsuit a “shakedown.”

“Clearly he picked the wrong profession, as with his imagination he should be writing fiction,” the source told the Reporter.

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