In November, it appeared that Voltage Pictures would be the latest company to pull off a lucrative sale to a Chinese buyer. Anhui Xinke New Materials announced it would buy 80% of the company, which produced both “The Dallas Buyers Club” and “The Hurt Locker,” for a healthy $345 million.
But in December, the deal suddenly collapsed, with Xinke alleging that Voltage had failed to provide adequate documentation to Chinese regulators.
The deal collapsed as China is taking increasing steps to clamp down on overseas investment. Voltage could well be one of the first victims of China’s new restrictions, but it’s not taking defeat lying down. Instead, it’s responding as Americans generally do — by going to court.
In a lawsuit filed in L.A. Superior Court on Friday, Voltage accuses Xinke of concocting a “false and groundless” excuse to void the sale agreement.
“Plaintiffs had not withheld any information sought by Chinese regulators,” the suit states. “Instead, Xinke was seeking to terminate the binding and enforceable Purchase Contract… for other reasons.”
The suit notes that at the same time the Voltage deal collapsed, Xinke announced it would instead purchase 29.9% of Pegasus Entertainment, which is based in Hong Kong.
Voltage is now seeking to obtain a $4 million deposit, which was posted by Xinke while the sale was pending and held in escrow by the Zhong Lun law firm. The firm, which is based in Beijing but has offices in the U.S., allegedly returned the $4 million deposit to Xinke despite initially promising to hold on to the funds while the dispute played out.
Voltage, which is suing in the name of two holding companies set up to effectuate the sale, filed suit against both Xinke and the Zhong Lun firm. The chances of recovering funds from the Chinese materials company would appear to be slim, but Voltage may have more luck with the law firm, which has to do business in the U.S.
The plaintiffs are represented by Jeremiah Reynolds of Kinsella Weitzman Iser Kump & Aldisert.