LAS VEGAS — Private Media Group's current board of directors will remain in place until an annual meeting of shareholders later this year, but a judge has ordered a receiver to take control of all company's assets.
The Clark County judge's ruling to appoint a receiver is being challenged by Private, which plans to appeal in an emergency writ to the Nevada Supreme Court.
"The company believes that the court’s appointment of a receiver violates state law, as the statutory and other legal requirements for appointment of a receiver have not been met, and that Judge [Elizabeth] Gonzalez’s decision was improperly motivated by personal bias," Private said in a filing obtained by XBIZ today.
Private, which recently posted a pretax net loss of $1.59 million in the last quarter, said that the current board of directors, including Berth Milton, will stay intact for the time being.
The court entered an order appointing Eric Johnson, a Private director and CEO of Private division Sureflix, the receiver for the company.
According to court documents, Johnson has been ordered "to insure specific company conduct."
"Mr. Johnson's first duty as receiver would be to schedule a shareholders' meeting and comply with the counting of the votes," Gonzalez wrote in a court order.
An earlier shareholder vote for Aug. 15 never came about, Gonzalez said, because Private never took "concrete steps" to hold it.
Private also said that the Nevada Supreme Court will hear oral arguments Sept. 8 to determine the validity of a lower court’s order that Consipio Holding has the right to vote 5.6 million shares pledged by Slingsby Enterprises Ltd. in 2001 to secure a $4 million loan from Commerzbank.
Those shares have been claimed to be beneficially owned by Berth Milton, the owner of Slingsby Enterprises Ltd. and CEO of Private.
The appointment of a receiver and surrounding legal claims taking place at Clark County District Court is the result of litigation between former CEO Ilan Bunimovitz and Private since his firing in July 2010.
In the suit, Bunimovitz claims he was terminated for demanding a probe of Milton’s alleged "self-dealing" transactions.
Bunimovitz's Nevada lawsuit, which included Private creditor and co-plaintiff Consipio Holding BV, alleges mismanagement of the company’s business by Private’s three independent directors and current CEO Milton.
In September, Private filed counterclaims against Bunimovitz and Consipio, alleging that Bunimovitz breached his fiduciary duty as a director and CEO of Private by improperly conspiring with Consipio to take control of the Barcelona-based adult entertainment company.