As predicted, Maker Studios’ Founding CEO Danny Zappin has brought a fresh lawsuit to the company he used to helm.
Last Summer, Zappin and three other Maker co-founders Scott Katz, Wil Watkins, and Derek Jones filed a lawsuit against Maker alleging that a selection of the company’s partners and investors kept secrets from them, breached their trust, and participated in ‘constructive fraud.’ Zappin also claims that Maker’s Board of Directors diluted the company’s common stock in favor of preferred stock, which allowed investors to take a larger share of the company and provided them with the power they needed to oust Zappin as Maker’s CEO and replace him with former Endemol CEO Ynon Kreiz.
At the time of the first lawsuit, Zappin and crew asked for a temporary restraining order, the removal of the current board of directors, and for the ‘questionable’ shares to be placed in a constructive trust, which will see them returned to the people Zappin believes are the rightful owners.
Now, a new motion has been filed with the Superior Court for the State of California requesting a temporary restraining order (TRO) to delay the shareholder vote on Disney’s acquisition of the Maker, which is due to take place on April 15.
The TRO request alleges that Maker did not give its shareholders enough information about Zappin’s original lawsuit last summer, omitting “material facts necessary for Maker’s shareholder to make an informed merger vote” from the information packets provided to shareholder before they cast their vote on whether to approve the Disney acquisition.
More specifically, Maker lists Zappin and crew as dissenters (people who don’t want the acquisition to go through or don’t like the price offered) when in fact Zappin’s complaint goes much further than that; alleging that many of the shares Disney is looking to acquire were issued under fraudulent means. The complaint goes on to state: “The Interested Parties are stealing (or skimming) tens of millions of dollars of the money being paid by Disney to enrich themselves… Sadly the Interested Parties have now dragged Disney into its fraud, and it will most likely be party to this action as an indispensable party to the likely securities class action looming in the background.”
The vote is due to take place on April 15, and a judge will decide whether to grant the temporary restraining order. If the vote is allowed to go ahead, the acquisition is expected to be approved by an overwhelming majority.
The YouTube Multi-Channel Network previously dismissed Zappin’s allegations as ‘without merit and baseless,’ and have promised to defend against his suit.
Zappin’s complaint explicitly names Maker’s current CEO Ynon Kreiz, his fellow Maker co-founders Lisa and Ben Donovan, prominent investors Mark Suster (Upfront Ventures) and Dana Settle (Greycroft Partners), and up to 50 others as defendants. It should also be noted that, at the time of the acquisition, Upfront Ventures and Greycroft Partners were the largest individual shareholders in Maker Studios. It will be interesting to see whether this lawsuit unveils any foul-play by Maker’s board, or if Zappin and crew are just trying to delay the inevitable.