LAS VEGAS — A Las Vegas judge has invalidated Private Media Group's latest shareholders’ vote for board of directors.
As a result, Private has been ordered by a judge to hold a new shareholders’ vote in which a debt holder will try to install new directors.
The ruling 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 Berth Milton.
Judge Elizabeth Gonzalez in her ruling said that Consipio claims to be owed $5.5 million by Private and that this debt is secured by 5.6 million shares of Private stock, about 27 percent of the shares of Private’s outstanding shares.
But Consipio was only allowed to vote 1.65 million of those shares, and its directors’ slate lost by less than 600,000 shares, Gonzalez wrote in her ruling.
Gonzalez said the other 3.95 million shares were "concealed" by Milton, who had been required to provide them to Consipio after Private defaulted on its debt to Consipio.
"The election is declared invalid," Gonzalez wrote in her order, adding shares held by Milton "in street name" may not be counted in the new election.
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.
Private spokeswoman Leslie Amadio told XBIZ that the company couldn't comment because "Nasdaq and SEC rules do not allow the company to say anything prior to the filing of Form 8-K with regard to the court ruling."
