Film Financier Sues Relativity Media | Courthouse News Service
Thursday, November 30, 2023
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Film Financier Sues Relativity Media

LOS ANGELES (CN) - A film investment company that put up millions for a slate deal with Sony Pictures filed suit in superior court Wednesday saying it had been the victim of "one of the greatest heist stories ever told."

Aramid Entertainment Fund Ltd. says that named defendant Fortress Investment Group invested in the deal based on confidential information Aramid had shared with the hedge fund. The financier says that Relativity then helped Fortress knock over the slate deal, wiping out Aramid's entire $44 million investment.

"This is one of the greatest heist stories ever told in the movie business. It involves a stunning cast of corporate characters: one of the world's largest entertainment companies, the third largest bank in America, one of the world's largest hedge funds, and a vehicle two of them helped bring to life in order to finance over $1 billion worth of feature films," said the complaint.

"Behind the scenes, this vehicle was ultimately hi-jacked, forcibly dismantled and ruthlessly plundered in order to line the pockets of the defendants and to knowingly deprive plaintiffs of their rights," the Superior Court complaint states.

Slate deals are designed to provide funding for movie studios for several films over a period of years. According to the lawsuit, the focus of Relativity since its 2005 inception has been on arranging financing for those deals. Relativity is led by Ryan Kavanaugh.

Kavanaugh, Sony and Citibank, however, are not named as defendants.

The deal between Sony and Relativity at the center of the dispute was known as the "Beverly Blvd" slate, and according to the lawsuit was "one of the largest slate deals ever announced." Under the deal, financiers put up $500 million while Sony matched that amount to create a $1 billion fund.

The slate of films included a remake of "21 Jump Street" and Adam Sandler vehicle, "I Hate You Dad," now known as "That's My Boy." (

Relativity did not invest in the slate, instead enlisting Citibank to solicit financiers, according to the lawsuit.

Aramid eventually put up $22 million in 2008. By late 2011 the value of its investment, with interest and principal, had increased to $44 million, according to the financier.

Aramid claims that in 2010, it gave Fortress access to its confidential information on the Beverly slate as part of a possible sale of assets to the hedge fund. Fortress, however, walked away without ever making an offer.

In the wake of financial crisis, Citi was looking to offload its position in the Beverly slate and eventually sold to Fortress at a discount, according to Aramid. It claims that the deal was most likely negotiated using the confidential information it had shared with the hedge fund.

It states that Fortress then persuaded Sony and Relativity to terminate the slate early and says that Relativity received roughly $14.5 million in return. After paying Relativity, Fortress allegedly made $81.6 million from wiping out the Beverly slate, while the value of Aramid's investment became worthless.

The financier claims that Fortress' "break-in and switcheroo" also paid off for Citi, which was able to liquidate its position in the slate, and Sony, which received a $6 million payoff and more than $200 million in savings.

It says that while the termination was negotiated, Relativity led Aramid to believe that the slate deal was "proceeding as planned."

"In carrying out their heist, the defendants committed various legal wrongs. Fortress breached the three-year NDA [non-disclosure agreement] it had entered into with Aramid when it used Aramid's confidential information and educating 'thoughts' about the Beverly Slate to structure its own transaction to Aramid's detriment. In doing so, Fortress also breached the implied covenant of good faith and fair dealing inherent in all agreements and commercial undertakings. Armed with full knowledge of Aramid's contractual and economic relations as a result of its review of Aramid's confidential information, including the appropriate time to approach Sony to terminate the deal,

Fortress intentionally and maliciously interfered with plaintiffs' contractual relations when it induced Sony and Relativity to terminate the Beverly Slate early. By representing to Aramid that the deal was proceeding as planned while at the same time secretly agreeing to its early termination, Relativity defrauded Aramid, the defendants also participated in a fraudulent transfer of assets which ensured that they would each receive a payout while leaving nothing for Aramid as a mezzanine investor," the complaint states.

The lawsuit adds: "The effect of these acts was to reduce the value of Aramid's investment from approximately $44 million to zero, and Aramid has been damaged by at least that amount."

Aramid is represented by Stanley Gibson of Jeffer Mangels Butler & Mitchell. It seeks restitution and $44 million in damages for breach of contract, breach of implied covenant of good faith and fair dealing, intentional interference with contractual relations, intentional interference with prospective economic advantage, fraud, fraudulent transfer, aiding, abetting and inducing fraudulent transfer, breach of fiduciary duty, and aiding, abetting and inducing breach of fiduciary duty.

Fortress subsidiary CF Film Finance AB LLC, and Relativity affiliates Relativity Media Holdings LLC, Beverly Blvd. LLC and Lord Securities are also named as defendants.

Aramid Grantor Trust is also a party to the lawsuit.

Relativity Media did not immediately respond to a request for comment.

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