In their amended complaint to the U.S. Bankruptcy Court, they leveled charges, which many have voiced for years, that Ryan Kavanaugh is a “con man.” Their legal filing adds, “Ryan Kavanaugh who through dishonesty and deceit operated a scheme to defraud investors and convert and misappropriate their funds. Time and again, Kavanaugh induced his victims to invest hundreds of millions of dollars to prop up his failing entertainment company, in what amounted to a classic Ponzi scheme.”
Relativity claims their Jones Day attorney wrote an opinion approving that the expenditures were permitted by the contract.
In their court filing, RKA went on to accuse investment bankers at Colbeck Capital – “Jason Colodne and Jason Beckman — sat on Relativity’s Board of Directors and operated hand-in-hand with both Relativity and Kavanaugh to raise additional capital for Relativity through lies and deliberate misinformation in a desperate — and ultimately public and unsuccessful — attempt to salvage their own investments in Relativity.”
There’s not much left of Relativity these days. In addition the bulk of the library going to Elliot Management in 2012, Colbeck Capital acquired the one bright spot at Relativity, its television division. Colbeck’s $150 million offer, in consideration for existing debt, was the only bid the bankruptcy auction produced when the Relativity hit the block in September 2015.
Independently of Relativity, Ron Burkle is heading the sports management business, which cobbled together three existing management agencies in 2012.
A Successful Salesman
The salesman’s job is not to make profits, only to sell the possibility of enormous profits. No one in Hollywood has managed to sell future profits better than Ryan Kavanaugh.
With rumors of a possible sale in the works, the vultures will almost certainly pick apart the skeleton of Relativity. The days of announcing $500 million commitments from Sony, Universal, and Netflix have passed, but one should never count out The Comeback Kid.