LOS ANGELES--(BUSINESS WIRE)--Moshe Barkat, founder of the industry-leading film and video post-production house Modern VideoFilm (MVF), filed a lawsuit late Friday in Los Angeles Superior Court charging that lender Medley Capital Corporation, consulting firm Deloitte Corporate Restructuring Group, and MVF board member Charles Sweet, through “bad faith misconduct, corruption, and gross incompetence,” breached their fiduciary duty to MVF and breached Barkat’s employment contract with MVF. The suit alleges that the defendants “destroyed Barkat’s life work, valued at more than $100 million at the time of their wrongdoing.”
Barkat founded MVF in 1979 and, as president and CEO, was the driving force behind the growth and success of the company for more than three decades. MVF was particularly well-regarded for its content management system, which converted and stored files in multiple formats for clients. The company has worked on high-profile film and TV shows including Avatar, Life of Pi, Star Wars, Modern Family, The Grand Budapest Hotel, Titanic 3D, Slumdog Millionaire, and many other award-winning productions.
According to his lawsuit, in 2012, Barkat wanted to pay off MVF’s existing debt and find a lender that would support MVF’s expansion. The lawsuit alleges that, after Barkat accepted a $50 million loan from Medley Capital, “Medley claimed ‘Events of Default’ had occurred, even though MVF had not missed a payment.” The lawsuit alleges that Medley then became heavily involved in the management and operations of the company, and took control of Barkat’s stock voting rights, fired MVF’s board of directors, appointed a board that was loyal to Medley, and removed Barkat as an officer of MVF. Additionally, according to the suit, a lucrative co-venture deal between MVF and Technicolor fell apart “due to Medley’s heavy hand and its bad faith pursuit of equity in MVF as a condition of closing [the Technicolor deal].”
Barkat claims that Medley then insisted that Barkat retain Deloitte, even though the consulting group, according to the lawsuit, “was clueless about the post-production business and proposed no plan for helping the company.” Deloitte executives took effective control of MVF, installed Charles Sweet as the sole board member, and “embarked on a fee churn” of $50,000 a week to Deloitte, which after paying itself $1 million from MVF’s coffers, “ran [MVF] into the ground….paying itself instead of [MVF] vendors,” according to the lawsuit.
By September 2014, according to the lawsuit, Medley, Deloitte and board member Sweet “did not want Barkat to be in position to scrutinize their conduct in running the company,” and “engaged in a witch hunt to come up with reasons to fire Barkat.” Barkat was subsequently terminated in breach of his employment contract after the defendants made numerous false, defamatory allegations, according to the lawsuit.
Also named as defendants in the lawsuit are Medley Opportunity Fund II LP, MCC Advisors LLC, and MVF’s parent company, Modern VideoFilm, Inc. The complaint includes causes of action against the defendants for breach of employment contract, defamation, unfair competition, and breach of fiduciary duty by Medley, Deloitte, and board member Sweet.
As a result of the defendant’s actions, Barkat has been damaged in an amount in excess of $100 million, according to the lawsuit.
Barkat’s attorney is Louis “Skip” Miller of Miller Barondess LLP, Los Angeles.
The lawsuit case number in Los Angeles Superior Court: BC583437