Garth Drabinsky and Myron Gottlieb, the co-founders of theatre company Livent Inc., have been ordered to pay $36.5 million US to noteholders.
In a recent ruling, Ontario Superior Court Justice Herman Siegel sided with U.S. litigants, who had applied to the Ontario court to enforce a 2005 decision by a U.S. judge, the Toronto Star reported Monday.
The penalty includes $23 million US plus interest. It was awarded to noteholders in a class-action lawsuit by U.S. District Judge Victor Marrero. The noteholders said they lost their money when Livent filed for bankruptcy protection in November 1998.
Drabinsky and Gottlieb did not present a defence in the U.S. case because they said their bail conditions prevented them from leaving Canada to go to the United States.
In May 2008, Drabinsky and Gottlieb face trial on criminal fraud charges laid by the RCMP in 2002. The Mounties allege that Livent's top brass defrauded creditors and private and public investors of about $500 million by falsifying corporate statements and misrepresenting the firm's financial health.
Livent was oncean entertainment colossus — producing many of the top theatre shows like Phantom of the Opera, Ragtime, and Show Boat. It won 19 Tony awards.
Livent owned theatres in Toronto, New York, Chicago and Vancouver. But in 1998, allegations of "accounting irregularities" surfaced. Livent's stock plunged and the investigations began.