Santa Monica Pictures, LLC, Perry Lerner, Tax Matters Partner - Page 40

                                        -127-                                         
          and the loans and advances to those companies.  CDR’s goal was to           
          realize whatever amount it could on those “bad” assets.  Indeed,            
          with respect to MGM Group Holdings, CDR’s representative, Mr.               
          Jouannet, was assigned the task of realizing whatever value he              
          could in that company, as quickly as possible.  Seemingly, this             
          objective would not be realized if Generale Bank and CLIS were              
          locked up in a film distribution business with the Ackerman                 
          group.                                                                      
               The film rights that the banks ultimately contributed to               
          SMHC were culled from the 1,000-film CDR library.  John Peters of           
          Epic Productions testified that these CDR films were acquired               
          from distressed companies to which Credit Lyonnais had lent                 
          money.  The films were acquired in numerous workouts,                       
          bankruptcies, or other similar proceedings.  Credit Lyonnais had            
          turned the films over to Epic Productions and Mr. Peters to                 
          manage; however, by late 1995, Credit Lyonnais instructed Epic              
          Productions to begin planning the liquidation of the CDR library.           
          The whole focus of Epic Productions’ business operations became             
          “the ultimate liquidation of this 1,000 film plus library.”  Mr.            
          Peters testified that Credit Lyonnais did not intend to pursue a            
          film distribution business with respect to these films.  On the             
          contrary, its overall goal was to liquidate the film assets that            
          it had acquired.                                                            







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