LOS ANGELES (CN) - A group of Hollywood producers says investment banks lured them into paying steep loan fees for $250 million in revolving credit that the banks never had to lend - and that the banks did it to raise money for their own financial crisis.
Ronald Tutor, David Bergstein and more than a dozen other movie producers and distributors say Daniel Zwirn, Steven Campbell and a string of banks tripped them up in "trumped-up loan violations" to make them pay for money they never received, and that the banks never had to loan.
"Faced with mounting calls for redemptions by their investors, an internal audit revealing extensive financial improprieties, and an SEC investigation of their business practices," the banks dangled the $250 million deal in front of the producers, but demanded they first refinance existing loans at a higher rate, according to the Superior Court complaint.
The banks then "imposed and collected millions of dollars in usurious and unconscionable interest rates from borrowers, as well as exorbitant fees and penalties and asserted a unilateral right to sweep monies out of plaintiffs borrowers' accounts for trumped up loan violations," the complaint states.
After paying through the nose, the producers say they discovered that the banks never had the $250 million available, being on the verge of liquidation with billions in unanswered redemption demands by investors.
The plaintiffs demand rescission on "every loan, guarantee, pledge, security agreement and other agreement" they made and compensatory and punitive damages.
They sued Zwirn, Campbell, D.B. Zwirn Special Opportunities Fund, Bernard Opportunities Fund, Bernard National Loan Investors, Hemlock (of Luxembourg) and Fortress Investment Group, alleging fraud and unlawful contracts.
The plaintiffs are represented by Jean Nogues and Lucia Coyoca with Mitchell Silberberg & Knupp.
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