Metro-Goldwyn-Mayer and its owner, the French bank Credit Lyonnais, separately sued former MGM owner Kirk Kerkorian and other defendants for alleged fraud and breach of fiduciary duty in the sale of the studio and are seeking no less than $ 1.25 billion in damages.

In one suit, filed in L.A. Superior Court and seeking at least $ 750 million, MGM named MDRVMDBOMDULMDBOMDULKerkorian, his Tracinda Corp., former MGM/UA exex Jeffrey Barbakow and Stephen Silbert, and appraisal firm Houlihan, Lokey, Howard & Zukin as defendants and alleges breach of fiduciary duty, negligent misrepresentation and other counts.

The Credit Lyonnais suit, filed in U.S. District Court in Los Angeles against the same defendants, largely accuses Kerkorian and the others of fraud in the sale of MGM to Giancarlo Parretti in November 1990.

It charges that Kerkorian knew all along that MGM would suffer a cash-flow shortage after the sale and that the defendants “secretly succeeded in stripping MGM of about every last penny and left it not only without funds, but facing an undisclosed $ 200 million shortfall for 1990, with no means of bridging the gap.”

The suits also charge that Houlihan Lokey issued a solvency opinion on Nov. 1 , 1990, confirming the viability of MGM after the sale to Parretti “despite a substantial cash-flow shortfall of approximately $ 250 million facing the combined company for the remainder of 1990.”

“When it began to appear that MGM/UA’s remaining assets would not generate sufficient cash flow to keep the combined entity (MGM-Pathe) viable after the acquisition, defendants attempted to sweep these facts under the rug,” according to the bank’s suit.

No representative of Houlihan was available for comment late yesterday. But a spokeswoman for several of the defendants called the allegations “patently absurd.” Patricia Glaser–a partner in Christensen, White, Miller, Fink & Jacobs , the law firm representing Kerkorian, Tracinda and Barbakow–said “Credit Lyonnais was essentially Parretti’s partner: It was Credit Lyonnais who made representations in writing to MGM regarding Parretti and Parretti’s investment in MGM. So I’m at a loss to see how Credit Lyonnais had a misrepresentation being made to it because it was the one making the representations.”

In its suit, CL alleges that it was fraudulently induced to provide the financial support to complete the sale of MGM/UA to Parretti’s Pathe Communications.

Kerkorian and others “intentionally inflated cash-flow projections, showed a huge positive projected cash flow over the next five years, despite the fact that MGM/UA and Pathe had been losing money consistently for the past five years and MGM had sold off its revenue-producing assets,” according to the bank’s suit. “That has absolutely no basis in fact. None,” Glaser countered, noting that “Houlihan Lokey are independent solvency experts. Independent.”

“In our opinion this is all hogwash,” she said.

Craig Parsons, an MGM spokesman, acknowledged the suit will be a “long battle ,” adding that it’s been long in developing.

“Issues surfaced in the discovery process of another lawsuit (involving the James Bond movies) and MGM has been gathering evidence for its case for a while. The company spent the last year freeing itself of Parretti’s influence, but this has been percolating for a while.”

Admitting the two lawsuits go hand-in-hand, the MGM rep summarized: “The implication is clearly that when it was sold, with recognition that the company would be in jeopardy, it violates that responsibility (of maximizing company’s value for shareholders). Here we say Kerkorian and management knew there were cash-flow problems.”

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