An early report indicates that former Livent shareholders have filed a consolidated and amended complaint in their action against Livent founder Garth Drabinsky. Details on the new complaint, filed March 10, are expected shortly and will be reported in full.
Drabinsky and colleague Myron Gottlieb were suspended in the summer of 1998 and ousted from Livent permanently in the fall of that year. Events leading to their departure began when former Hollywood superagent Michael Ovitz purchased a controlling stake in the company in April 1998 and then made discoveries that led to subsequent allegations of cooked books.
Attorney Arthur Stock of the Philadelphia firm Berger and Montague represents Livent shareholders and was one of the first attorneys to sue on their behalf. On March 13, Stock told Playbill On-Line, "We filed a consolidation and some additional complaints on March 10, but we're still in the procedural phase and everything is still in discovery."
Livent shareholders have alleged they were hurt financially by inflated values and false records reported by the company, a decline in stock values resulting from the investigation and correction of the matter and a related halt in the trading of Livent's stock in 1998.
In July 1999, Livent's assets were sold to SFX Entertainment after SFX's $115 million bid for the bankrupt theatrical production company was approved by the courts. Livent's bankruptcy filings in the United States were announced Nov. 18, 1998. The Livent board of directors had filed for protection under Canada's Companies' Creditors Arrangement Act Nov. 19, 1998. In September 1999, the Superior Court of Justice in Ontario, Canada appointed Ernst & Young as receiver and manager for the "property, assets and undertaking" of Livent.
On Feb. 29, 2000, SFX Entertainment was in turn purchased by radio and advertising giant Clear Channel Communications in a stock swap initially valued at $4.4 billion, less $1.1 billion in debt. That deal, expected to close in the third quarter of 2000, will follow Clear Channel's earlier announced purchase of AMFM for a reported $14 billion.
Drabinsky and Gottlieb are reportedly in Canada and still face charges in this country. U.S. Attorney Mary Jo White's office did not return a call by press time.
Livent' spectacular and colorful business strategy was bolstered by high profile image making and media events including the opening of the refurbished Ford Center in New York City, large stage productions like Ragtime and theatre openings in Chicago and Toronto. Livent's lavish spending, once a driving force associated with the revitalization of Broadway, eventually came to symbolize mismanagement, based on accusations of cooked books and seriously overstated values.
-- By Murdoch McBride
