Film Fund Sues To Wrest Capital From Financier By Samuel Howard
Law360, New York (September 23, 2011, 6:52 PM ET) -- The private equity arm of independent film production company PalmStar Entertainment Inc. filed suit Thursday in California alleging that Sycamore Entertainment Group Inc. welshed on an agreement to finance a film project. PalmStar Media Capital LLC joined forces with Sycamore to form Milestone Media Capital Fund LLC, but the defendant only contributed $150,000 of the $900,000 it had agreed to provide, according to the complaint filed in the California Superior Court in Los Angeles.
“Defendants materially and substantially failed to perform and have breached the agreement by failing to pay its capital contribution of $900,000 ... to plaintiff’s damage in the sum of $750,000,” the complaint said.
PalmStar teamed up with Sycamore, an independent film marketing and distribution company, to create a film finance and investment fund in April 2011, with PalmStar founder Kevin Frakes and 108 Media Corp.’s Abhishek Rastogi providing services and Sycamore’s CEO Edward Sylvan backing the venture, according to the complaint.
The majority of the Milestone Media budget was devoted to salaries, with each of the three founding members slated to receive $200,000 and the remaining $300,000 to be spent on getting the company up and running, according to the filing.
The venture failed to go as planned, however, as Sycamore never supplied the promised capital, the complaint said.
Representatives for Sycamore could not be reached for comment on the allegations.
In March, just weeks before entering the agreement with PalmStar, Sycamore announced that NMS Capital Group would invest $1 million in the film distribution company.
The private equity division of NMS agreed to buy $1 million of Sycamore’s convertible preferred stock at $1 per share, Sycamore said.
Each of the series B preferred shares is convertible into five common shares, which trade on the Pink Sheets, for $0.20 per share, representing a 12 percent dividend, according to Sycamore.
Sycamore said at the time that the proceeds of the private placement would be used to complete Sycamore’s distribution network, which includes festivals, online sources and filmmaker deals.
Sylvan co-founded Sycamore in June 2010 to provide marketing and distribution for films in the $15 million to $25 million range, according to the Sycamore website.
PalmStar is represented by Jerry Phillips of Loeb & Loeb LLP.
Counsel information for Sycamore is not available. . The case is PalmStar Media Capital LLC v. Sycamore Entertainment Group Inc., case number BC 470100, in the Superior Court of California, County of Los Angeles.
--Editing by Kat Laskowski.
You'll also find on biv.com
Quote: Defendants
Edward Adolphus Sylvan and Terry Sylvan and Sycamore Entertainment Group Inc. and Ikkee Battle and Natalia Evans and Cynthea Mair and Lauren Sylvan and Simone Sylvan and John Doe and Jane Doe
Plaintiff
April D. Andres
Claim
Damages for fraudulent conveyance to dodge an $85,000 debt to plaintiff owing on a settlement agreement.
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