Post by Admin on Jan 5, 2019 20:59:07 GMT
variety.com/1993/biz/news/credit-lyonnais-bank-shot-falls-short-104495/?fbclid=IwAR1mhIW_F6YaGMGxfdIHPWRkvU4b8wLXWSyUa07Zufvd-3Tk-RLn6FzRhI8
Credit Lyonnais bank shot falls short
From the courtroom to the boardroom, to the election booth, Credit Lyonnais has found itself thrown into a role this past year that it never banked on.
Once the leading lender to the entertainment industry, the French government-owned bank, with more than $ 300 billion in assets worldwide, has been the target of investigations and continued heated controversy on both sides of the Atlantic over its handling of a meager amount of that portfolio.
Despite the combined total of its entertainment loans, estimated at less than $ 4 billion, those loans have catapulted the bank and its key executives into a prickly position.
Their practices have become a political football in France’s national elections, where the rival conservative parties are trying to upset the ruling Socialist stronghold, evict President Francois Mitterrand and possibly topple the regime of CL.
While one member of the conservative party has pushed his book, criticizing the bank’s purported ties to the Mafia and alleged criminal Socialist factions through its relationship and loans to ousted MGM owners Giancarlo Parretti and Florio Fiorini, reports of investigations by three federal agencies in the United States surfaced earlier this year (Variety, Jan. 11).
In the midst of this, CL has launched numerous lawsuits against former MGM owner Kirk Kerkorian and his Tracinda Corp., accusing them of fraud in connection with Parretti’s highly leveraged $ 1.3 billion buyout of MGM on Nov. 1, 1990.
It was CL that helped Parretti pull it off through loans to the Italian financier and to Parretti, and Fiorini’s European holdings, which acted as investors.
The suits filed in federal and state courts against Kerkorian by the bank and MGM, which it now runs, allege not only fraud, but breach of fiduciary duty. CL, which continues to pump $ 1 million a day into running the studio, seeks $ 1.25 billion in damages in the two suits, which have been combined.
In short, CL wants to get the bulk of the money back that it has lost in MGM, through both the buyout and ongoing loans to keep the lion alive.
In Kerkorian’s sale to Parretti, Kerkorian walked away with a billion dollars. CL was left with the debt and after a long and arduous trial for control of MGM in Delaware, Parretti was eventually booted out.
In its pending litigation with Kerkorian, CL and MGM charge the former owner with negligent misrepresentation of the company’s financial health via a solvency opinion done by the appraisal firm Houlihan, Lokey, Howard & Zukin–hired by Kerkorian.
That opinion basically confirmed the viability of the studio following the sale “despite a substantial cash-flow shortfall of approximately $ 250 million facing” the company before the 1990 year was to ever end, CL’s suit stated.
But Kerkorian fired back with an equally vigorous and nasty counterclaim and heated publicity campaign, charging the bank with fraud.
Although his claim was thrown out by a judge in Los Angeles Superior Court, where CL’s dual lawsuits were combined, Kerkorian’s attorneys have vowed to restate the allegations and continue the fight.
Like the bank, Kerkorian has embarked on a publicity war despite claims made by both sides that the battle would be waged in the courtroom not the media.
But the feud with Kerkorian is merely one keeping Credit Lyonnais preoccupied these days.
As it continues to restructure and recall what have become bad loans made to numerous, poorly capitalized independent film companies in the mid-to-late 1980s , CL has found itself embroiled in other vicious litigation.
First is the case of Hemdale Film Corp. (now known as NSB), which owes CL about $ 90 million.
The indie that produced “Terminator” was forced into Chapter 11 bankruptcy last year by unpaid creditors. Although under management control of an appointee of the U.S. trustee’s office, the company hired a San Francisco law firm to represent it in litigation it plans to bring against Credit Lyonnais.
Sources have said that the company will sue CL over lender liability, equity subordination and fraudulent transfers of assets, particularly targeting the sell-off of sequel rights to “Terminator” to another struggling CL-backed client , Carolco Pictures.
On top of Hemdale litigation, are the scandalous claims made in the brawl between CL and ousted Epic Prods.’ owners Moshe Diamant and Eduardo Sarlui.
The two have sued CL in both the United States and in France for $ 100 million-plus in damages, claiming fraud, breach of contract and racketeering.
The suit was filed in federal court, after the bank literally catapulted the two men from control on a Saturday in what the duo described as a “blitzkrieg seizure,” kicking them out and taking control of records, files and their offices.
CL has countered, claiming the men grossly abused loans by embezzling company funds to support lavish lifestyles and gifts to relatives and friends. The bank also said they diverted millions of dollars in assets to other companies they owned or controlled and that they improperly licensed films for below-market terms.
The bank also accused them of directly misappropriating film rights and acquiring films from their affiliates.
Sarlui and Diamant have vigorously refuted those claims. But the litigation trail continues.
In January, Credit Lyonnais’ Rotterdam branch (Credit Lyonnais Bank Nederland–which has been largely responsible for all of the troubled loans–sued Kodiak Films and its owner, Wolf Schmidt, for allegedly failing to pay a loan balance of $ 15.4 million. It also alleged in Superior Court documents that Kodiak improperly retained distribution proceeds of about $ 2.5 million, which CL says should have been used to pay off bank debt.
Last summer, longtime CL client producer Menahem Golan and his 21st Century Film Corp. sued CLBN claiming a series of contract breaches in which the bank allegedly assumed improper control over the filmmaker’s finances. Golan and his company seek $ 75 million in punitive and compensatory damages.
Despite the costly litigation, Credit Lyonnais says it will remain in the entertainment lending business–but on a scaled-back basis.
Credit Lyonnais bank shot falls short
From the courtroom to the boardroom, to the election booth, Credit Lyonnais has found itself thrown into a role this past year that it never banked on.
Once the leading lender to the entertainment industry, the French government-owned bank, with more than $ 300 billion in assets worldwide, has been the target of investigations and continued heated controversy on both sides of the Atlantic over its handling of a meager amount of that portfolio.
Despite the combined total of its entertainment loans, estimated at less than $ 4 billion, those loans have catapulted the bank and its key executives into a prickly position.
Their practices have become a political football in France’s national elections, where the rival conservative parties are trying to upset the ruling Socialist stronghold, evict President Francois Mitterrand and possibly topple the regime of CL.
While one member of the conservative party has pushed his book, criticizing the bank’s purported ties to the Mafia and alleged criminal Socialist factions through its relationship and loans to ousted MGM owners Giancarlo Parretti and Florio Fiorini, reports of investigations by three federal agencies in the United States surfaced earlier this year (Variety, Jan. 11).
In the midst of this, CL has launched numerous lawsuits against former MGM owner Kirk Kerkorian and his Tracinda Corp., accusing them of fraud in connection with Parretti’s highly leveraged $ 1.3 billion buyout of MGM on Nov. 1, 1990.
It was CL that helped Parretti pull it off through loans to the Italian financier and to Parretti, and Fiorini’s European holdings, which acted as investors.
The suits filed in federal and state courts against Kerkorian by the bank and MGM, which it now runs, allege not only fraud, but breach of fiduciary duty. CL, which continues to pump $ 1 million a day into running the studio, seeks $ 1.25 billion in damages in the two suits, which have been combined.
In short, CL wants to get the bulk of the money back that it has lost in MGM, through both the buyout and ongoing loans to keep the lion alive.
In Kerkorian’s sale to Parretti, Kerkorian walked away with a billion dollars. CL was left with the debt and after a long and arduous trial for control of MGM in Delaware, Parretti was eventually booted out.
In its pending litigation with Kerkorian, CL and MGM charge the former owner with negligent misrepresentation of the company’s financial health via a solvency opinion done by the appraisal firm Houlihan, Lokey, Howard & Zukin–hired by Kerkorian.
That opinion basically confirmed the viability of the studio following the sale “despite a substantial cash-flow shortfall of approximately $ 250 million facing” the company before the 1990 year was to ever end, CL’s suit stated.
But Kerkorian fired back with an equally vigorous and nasty counterclaim and heated publicity campaign, charging the bank with fraud.
Although his claim was thrown out by a judge in Los Angeles Superior Court, where CL’s dual lawsuits were combined, Kerkorian’s attorneys have vowed to restate the allegations and continue the fight.
Like the bank, Kerkorian has embarked on a publicity war despite claims made by both sides that the battle would be waged in the courtroom not the media.
But the feud with Kerkorian is merely one keeping Credit Lyonnais preoccupied these days.
As it continues to restructure and recall what have become bad loans made to numerous, poorly capitalized independent film companies in the mid-to-late 1980s , CL has found itself embroiled in other vicious litigation.
First is the case of Hemdale Film Corp. (now known as NSB), which owes CL about $ 90 million.
The indie that produced “Terminator” was forced into Chapter 11 bankruptcy last year by unpaid creditors. Although under management control of an appointee of the U.S. trustee’s office, the company hired a San Francisco law firm to represent it in litigation it plans to bring against Credit Lyonnais.
Sources have said that the company will sue CL over lender liability, equity subordination and fraudulent transfers of assets, particularly targeting the sell-off of sequel rights to “Terminator” to another struggling CL-backed client , Carolco Pictures.
On top of Hemdale litigation, are the scandalous claims made in the brawl between CL and ousted Epic Prods.’ owners Moshe Diamant and Eduardo Sarlui.
The two have sued CL in both the United States and in France for $ 100 million-plus in damages, claiming fraud, breach of contract and racketeering.
The suit was filed in federal court, after the bank literally catapulted the two men from control on a Saturday in what the duo described as a “blitzkrieg seizure,” kicking them out and taking control of records, files and their offices.
CL has countered, claiming the men grossly abused loans by embezzling company funds to support lavish lifestyles and gifts to relatives and friends. The bank also said they diverted millions of dollars in assets to other companies they owned or controlled and that they improperly licensed films for below-market terms.
The bank also accused them of directly misappropriating film rights and acquiring films from their affiliates.
Sarlui and Diamant have vigorously refuted those claims. But the litigation trail continues.
In January, Credit Lyonnais’ Rotterdam branch (Credit Lyonnais Bank Nederland–which has been largely responsible for all of the troubled loans–sued Kodiak Films and its owner, Wolf Schmidt, for allegedly failing to pay a loan balance of $ 15.4 million. It also alleged in Superior Court documents that Kodiak improperly retained distribution proceeds of about $ 2.5 million, which CL says should have been used to pay off bank debt.
Last summer, longtime CL client producer Menahem Golan and his 21st Century Film Corp. sued CLBN claiming a series of contract breaches in which the bank allegedly assumed improper control over the filmmaker’s finances. Golan and his company seek $ 75 million in punitive and compensatory damages.
Despite the costly litigation, Credit Lyonnais says it will remain in the entertainment lending business–but on a scaled-back basis.