French-owned Credit Lyonnais Bank Nederland was barred Thursday in U.S. District Court from foreclosing on TWE Group Inc. and its Epic Prods. affiliate.
Judge Dickran Tevrizian’s injunction also derailed the bank’s planned Tuesday auction of TWE’s 150-film library.
“The injunction stops this foreclosure sale in its tracks,” said TWE attorney Brian C. Lysaght of O’Neill & Lysaght. “It also bars Credit Lyonnais from any other collection efforts against TWE.”
The injunction is the latest in a series of legal actions that began when Epic Prods. co-chief executives Moshe Diamant and Eduardo Sarlui filed a $ 100 million suit against the bank for breach of contract after they were ousted (Daily Variety, Aug. 25, 1992).
CLBN countersued in January claiming the pair “cooked” Epic books and that TWE owes the bank $ 47.8 million in outstanding loans (Daily Variety, Jan. 20). Both lawsuits are pending.
In the interim, Diamant is claiming a round of victory. “The foreclosure sale was a crude effort to steal our library and put us out of business,” Diamant said. The bank planned to auction the 150-film library June 1. However, a CLBN spokesman said the injuction does not change the library’s status of bank collateral.
“We believe the judge has fashioned a remedy that protects everyone by protecting the collateral and the income stream from the collateral,” the spokesman said.
The injunction was based on a recommendation by court-appointed special master, retired Justice Elwood Lui. Another hearing to determine if the special master’s role should include overseeing TWE’s income stream is pending.
“He’s going to be acting in control of Epic and looking over everybody’s shoulder in this case. That’s fine with us,” Lysaght said.
The injunction also raises the question of who owes money to whom, Lysaght said.
“I think the judge decided there was real dispute as to whether anything is owed CLBN, or whether in fact CLBN owes many millions to Sarlui and Diamant,” Lysaght said. “For us to get an injunction is a pretty good indication that a judge looked at this and said something smells here.”