Bankrupt Hollywood studio calls a story about its big-spending founder 'defamatory'

Relativity Media has released a statement calling the recently released New York magazine article about founder and CEO Ryan Kavanaugh “defamatory” and filled with “unsubstantiated gossip.”

The article, written by Benjamin Wallace, exposes the once-promising company’s dive into bankruptcy and Kavanaugh’s alleged business practices, including spending money on lavish expenditures like a lease on a 20,000-square-foot hanger at Santa Monica Airport. According to Wallace, the hangar served as Kavanaugh’s office, and “housed a luxury RV, huge sectional sofas facing big movie screens, exotic cars, old arcade video games, a boxing ring, a climbing wall, and an archery range.”

“To work at Relativity in the last several years was to live in the palace of a magical-realist king,” Wallace writes, where Kavanaugh used a Segway to manoeuvre the halls and his private bathroom featured toilet paper covered with Barack Obama’s face.

The company filed for Chapter 11 bankruptcy on July 30, 2015, but will seek to bring the remaining company assets out of bankruptcy in a February 1 hearing.

The statement released by Relativity said:

“New York magazine has published a defamatory story about Relativity which deplorably embodies that old newsroom saying, ‘Don’t let the facts get in the way of a good story.’ The article is filled with unsubstantiated gossip and allegations which opportunistically fit its predetermined narrative about Relativity and its founder, Ryan Kavanaugh. Prior to the story’s publication, we provided the magazine with actual facts and data that its editors and reporter chose to ignore. We remain focused on completing and receiving approval for our plan of reorganization and look forward to our emergence as a stronger company.”

David Haskell, New York magazine’s deputy editor, told Deadline, “The piece speaks for itself. The response [from Kavanaugh] was vague and expressed his displeasure about the piece. We feel as confident in it now as we did before it went to press.”

Kevin Spacey and Dana Brunetti, who earlier this month were named chairman and president of the company, respectively, have yet to comment on the story.

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