A second lawsuit charging officers with mismanagement has been filed in the Delaware Court against American Multi-Cinema by stockholder James M. Bird, which accuses officers and directors of grossly mismanaging the giant theater circuit.
Bird’s suit seeks unspecified damages against the company.
The lawsuit follows a similar suit filed in January by Scott C. Wallace, a former AMC exec who now owns a small circuit of cinemas in Hawaii, California and Nevada.
Both lawsuits named Stanley H. Durwood, AMC’s founder, director and chief executive officer, his son, Edward D. Durwood, president and director, and outside directors Charles J. Egan Jr. and Paul Vardeman.
The two filings claim essentially that the Durwoods treated AMC as a private company and diverted its assets to enrich themselves through an affiliated company, American Associated Enterprises. The directors allegedly failed to stop the transactions. After a warning the Durwoods stopped operation of the affiliate entirely.
The Bird lawsuit against AMC officers names another defendant, Phillip Ean Cohen, a New York investment banker, who served as director from February 1984 to November 1991.
The lawsuit alleges that defendant Cohen “wrongfully extracted” from AMC a finder’s fee of $ 1 million to his investment banking firm, Morgan Schiff & Co., during the 1989 sale of theaters to TPIE Enterprises Inc.
Facing a fight
Raymond Beagle, AMC general counsel, said that no motions had been filed by the defendants in either lawsuit, but said officers and directors believe they have done no wrong and plan to fight the action.
Such lawsuits are referred to as “derivative,” and are the only civil remedy shareholders have for alleged breach of fiduciary duties of top officers and directors of the company that is named as defendant only as a technicality.