Ryan Kavanaugh may have ended a nasty spat with a key investor that spilled over into public view.
The Relativity founder is in a dispute with VII Peaks Capital, but a cease fire has been reached now that the hedge fund has agreed to put $3 million into an escrow account. It has agreed to continue negotiating a settlement. The parties fell out over a $30 million commitment that VII Peaks made to the Kavanaugh-led investment group. The money was going to be used to buy back parts of the company.
Kavanaugh is heading up a consortium of buyers that includes investor Joseph Nicholas and the Ron Burkle-backed investment firm OA3 in a $90 million bid for Relativity’s film studio, a stake in its sports agency and for-profit school and other businesses.
After VII Peaks failed to come through on $30 million in financing, a spokesman for the Kavanaugh group released a blistering statement that stopped just short of accusing the hedge fund of fraud. It implied that the fight would result in litigation.
“VII Peaks Capital is attempting to obfuscate its own failure to perform by shifting responsibility to the investors, including the CEO who worked around the clock to save the company,” a spokesperson for Relativity said. “Since Relativity’s suit, VII Peaks has as much as admitted that they lacked the necessary funding, instead trying to broker third party capital to cover their own shortcomings.”
As part of the deal to resolve these differences, Relativity has agreed to contact media outlets that ran the original statement and to request a retraction.
Relativity, which counts films like “The Immortals” and shows like “Catfish” among its credits, filed for Chapter 11 protection last summer. It listed liabilities of almost $1.2 billion and assets with a book value of just under $560 million in filings.
Its television business has been sold to a group of hedge funds that includes Anchorage Capital, Luxor Capital and Falcon Investment Advisors. They bought the studio in exchange for forgiving $125 million in debts.