1:26pm PT by Ashley Cullins
Ron Burkle's Company Wants to Bring Lantern Execs Into Fraud Lawsuit
Billionaire Ron Burkle's Yucaipa Companies is now targeting two Lantern Capital execs in a lawsuit alleging it was surreptitiously shut out of a deal to buy The Weinstein Co.'s assets.
Yucaipa in July sued Lantern, and now it wants to add CEO Andy Mitchell, managing director Milos Brajovic and Spyglass Entertainment (Lantern Entertainment's new corporate identity). It also wants to add a host of new causes of action, including breach of implied-in-fact contract, false promise, fraud in inducement, intentional misrepresentation and unfair competition.
Here's bow Burkle's company says the dispute happened: Yucaipa wanted to buy TWC's assets outside of bankruptcy, having worked with the company and gained familiarity with its portfolio, assets and liabilities. Lantern and Yucaipa joined forces, with the latter requiring a confidentiality agreement that barred Lantern from using any of Yucaipa's information outside of their deal. The sale didn't materialize before TWC's bankruptcy. So Yucaipa and Lantern entered into an oral agreement under which Lantern could use the confidential information in exchange for paying Yucaipa a transaction fee after the sale and giving it an opportunity to invest in Lantern. Shortly after the sale, Yucaipa claims Lantern made clear it wouldn't honor their deal.
"Defendants exploited Yucaipa’s extensive industry knowledge and relationships in order to secure a winning bid for TWC’s assets in bankruptcy based, inter alia, on the false promise that Yucaipa would be permitted to invest in the successor entity, that its fees and expenses would be reimbursed, and that it would pay Yucaipa a transaction fee," writes attorney Perlette Jura in the proposed amended complaint. "Lantern could not have closed the transaction without access to the Yucaipa Confidential Information."
According to a May 1 filing, Yucaipa learned during discovery that Lantern's principals told investors it had no deal in place with Yucaipa. The company also alleges that Lantern told a SunTrust banker that Yucaipa would be involved in order to obtain financing.
A hearing on Yucaipa's motion for leave to amend is currently set for June 21.