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Silver Screen investors file suit against Disney

Investors in Silver Screen Partners III, a limited partnership formed in 1986 and designed to raise funds for films distributed by the Walt Disney Co., have filed a $100 million lawsuit against the studio to stop it from acquiring the partnership’s 19-film library.

The lawsuit also seeks class action status for investors in the partnership and an injunction against the studio.

‘Self-dealing price’

In a complaint filed Friday in L.A. Superior Court, plaintiffs Wade Lennan, Pia Mashour and Michael J. Raleigh claim the studio is buying the library “at the self-dealing price of $125 million” and assert its value could be as much as $250 million.

The library boasts such films as “Three Men and a Baby,” “Who Framed Roger Rabbit,” “Good Morning, Vietnam” and “Honey, I Shrunk the Kids.”

The plaintiffs also suggest that Disney and Silver Screen Management, the fund’s managing partner, have conspired to allow the studio to exercise its buyout option without conducting an independent appraisal.

The studio, the complaint states, selected the directors of the managing partner, who are allowing it to buy the library at “a grossly undervalued price.”

Seeking $100 million

The lawsuit, which seeks $100 million in compensatory damages, wants the court to enforce the rights of the partnership, a rescission of Disney’s buyout provision and an accounting.

It also seeks an injunction against the studio preventing it from purchasing the limited partnership rights at below fair-market value.

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