Film industry veteran Tarak Ben Ammar says former partner Technicolor acted “disloyally” in the lead-up to the collapse of post-production group Quinta Industries last year. Technicolor denies wrongdoing.
Former business partners Quinta Communications and French digital media company Technicolor are heading to the courts over the events surrounding the collapse of jointly-owned Quinta Industries last year.
Some six months after the post-production group went into liquidation, former owner Tarak Ben Ammar is mounting a civil litigation case, alleging “disloyal” behaviour by Technicolor in the lead-up to the bankruptcy.
The dissolution of Quinta Industries – which included special effects and 3D animation specialist Duran Duboi, digital post-production specialist Duboi, digital conversion expert Scanlab, sound outfit SIS and film lab LTC – sent shockwaves across the French film industry last year.
Technicolor acquired a number of Quinta Industries subsidiaries during its liquidation, regrouping them under the Technicolor Entertainment Services France umbrella group, created at the beginning of 2011.
Quinta Communications chief Ben Ammar accuses Technicolor, which had a 17.5% stake in Quinta Industries as well as an option to buy the whole company from 2006 onwards, of allowing the group to fail so it could acquire its key assets in their entirety at a cheaper price.
“We have a letter in our possession signed by the French Ministry of Industry asking Technicolor to invest alongside Quinta Communications and the French government to save the company. Even though both the government and Quinta Communications agreed to do so, Technicolor decided not to without giving any clear explanations,” Ben Ammar told Screen. “Later we can see they ended up picking up assets worth €30 million for less than €1 million.”
Batting back Quinta’s allegations, Technicolor said in a statement on Tuesday: “Technicolor asserts that its takeover of parts of Quinta Industries was done in strict accordance with the law, within the framework of the judicial liquidation of the company carried out by the Commercial Court of Nanterre, and that it reserves the right to assert its rights against Mr. Ben Ammar with all legal means.”
In response, Ben Ammar countered: “We believe Technicolor did not disclose to the Court of Nanterre the full nature of the shareholders agreement they had signed with Quinta Communications, in which they had equal rights to Quinta Communications in the management of the company. We believe that if Technicolor had done so, the Court would never have given them the right to buy back the assets.”
Going back to the period prior to liquidation, Ben Ammar says Technicolor reneged on a promise to acquire the whole of Quinta Industries, included as an option in the contract when it originally acquired the 17.5% stake in the company in 2006, which it renewed every year from 2006 to 2011.
Sources within Technicolor confirmed that such an option had existed but that it was a mere contractual formality and that there had never been any intention to acquire the whole company.
Ben Ammar notes, however, that Technicolor conducted three separate due diligence operations from 2009 to 2011, in the process acquiring detailed knowledge of Quinta Industries unavailable to rival bidders.
Ben Ammar also says the 2006 contract contained a clause preventing Quinta Communications from doing business with its former client Deluxe Entertainment Services Group, a key competitor of Technicolor who had also expressed interest in entering the French market at the time.
Last July, Technicolor and Deluxe announced a strategic agreement to swap 35mm processing services in Europe and North America. Ben Ammar says Quinta Communications was kept in the dark over these negotiations.
The Technicolor sources in Tuesday denied such a clause existed. A claim countered by Ben Ammar who says the investment agreement signed with Technicolor in 2006 had an explicit clause prohibiting Quinta from selling its participation to Deluxe.
Quinta Communications built up Quinta Industries over a 10-year period, kicking off with the acquisition of special effects group Ex Machina in 2002, and Duran Duboi, shortly after in 2003. Ben Ammar says he is now €25 million out of pocket.
In what could be the opening salvo in the legal battle, court bailiffs exercised a Versailles Court of Appeal order, in accordance with a new French discovery-style law known as article 147, to search computers at Technicolor’s HQ last Friday for documentation that could substantiate Ben Ammar’s claims.
The website of news magazine Le Point reported the bailiffs went through Technicolor’s offices with “a fine-tooth comb”, copying emails and documents on the company’s computers, including those of CEO Frédéric Rose and finance director Stéphane Rougeot.
Technicolor confirmed to Screen on Tuesday that bailiffs had visited their premises but underlined the search was part of a preliminary investigation to decide whether there was a case to be made.
“The Appeal Court of Versailles has appointed a bailiff to carry out a simple document search, on the basis of Mr. Ben Ammar’s allegations only, without Technicolor being associated with this procedure,” the company said in a statement.
The Versailles judge must now decide whether there is enough evidence to launch a case.
New of the search broke on the eve of Technicolor’s General Shareholders’ Meeting in Paris on June 20. Rather than Quinta, however, the key topic discussion a the meeting is most likely to be rival bids by US private equity technology specialist Vector Capital and banking group JP Morgan Chase for a 30 percent stake in the company.