April 01, 2013 5:26pm PT by Eriq Gardner
Kevin Costner Sued by Morgan Creek in Bankruptcy Court
Morgan Creek Productions has filed a lawsuit against Kevin Costner.
The complaint was filed Friday in New York bankruptcy court in the midst of the Chapter 11 case concerning Inverness Distribution Limited.
Last year, Costner sued Morgan Creek over profits from the 1991 blockbuster film, Robin Hood: Prince of Thieves. In the lawsuit, the actor alleged that he received no participation statements in 2010 and 2011 and late statements from 2004 to 2009. He accused Morgan Creek of improper accounting practices and assigning rights to 41 films including Robin Hood to the international division, Inverness, which was owned by Morgan Creek's president.
Now with Inverness in bankruptcy, Morgan Creek is attempting to get a bankruptcy judge to stay Costner's lawsuit.
According to Morgan Creek's complaint (read in full here), Costner's agreement on Prince of Thieves allowed it to assign its rights and obligations to the picture.
That's what the film company says it has done, and under the deal with Inverness, the debtor "expressly assumed all of the Morgan Creek Counterparties’ obligations," including payment obligations on Prince of Thieves.
"The Defendants are aware of the Debtor’s chapter 11 case and of the assignment of the distribution rights to the Debtor," the complaint continues. "However, to avoid the impact of the Debtor’s bankruptcy on the Defendants’ enforcement rights and without regard to the automatic stay, the Defendants filed a complaint in a California state court against the Morgan Creek Counterparties without joining the Debtor notwithstanding the potential adverse effect such filing would have on the Debtor’s estate and attempts to reorganize."
Morgan Creek says that Inverness is the "real party defendant" in Costner's action, and that if Costner prevails, Inverness "is obligated to indemnify the Morgan Creek Counterparties for all losses suffered."
In other words, if Costner wins his lawsuit against Morgan Creek, the real loser allegedly would be Inverness, which is under bankruptcy court protection.
Thus, Morgan Creek is looking to suspend Costner's lawsuit.
In the new complaint filed in bankruptcy court, Morgan Creek identifies $12.5 million in funds withdrawn from the debtor's bank account "without accounting for any royalties or other amounts owed Costner under the Costner Agreements" and that a portion of that money is likely derived from Prince of Thieves.
Morgan Creek warns, "The Defendants’ rights to any such monies may disturb the settled expectations of the parties in the bankruptcy case with respect to their claims to cash held by the Debtor."
THR.com has reached out to Costner's attorney and will update with any comment.
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