Nevada Justices Deny Motion to Stay Private's Receivership

Oct 12, 2011 7:30 PM PST

LAS VEGAS — The Nevada Supreme Court today denied Private Media Group's motion to stay receivership in the company.

“Having reviewed appellant's renewed emergency motion for stay, respondents' opposition, and appellant's reply, we are not persuaded that a stay of the district court order appointing a receiver is warranted,” Nevada justices Nancy Saitta, Mark Gibbons and James Hardesty wrote in their ruling.

However, they said, they would stay in part “any conduct by the receiver or the receiver's counsel to interfere in the relationship between [Private and its officials, including CEO Berth Milton] and its counsel or between [Private's] counsel and counsel's relationship to its clients in related matters before this court.”

Specifically, they said that neither Private receiver Eric Johnson nor the receiver's counsel may interfere with Private's counsel's representation of its clients “to allow the clients to contest the receiver's appointment or the personal jurisdiction determinations currently pending before this court.”

Private earlier argued that the "appointment of a general receiver with broad unlimited powers is inconsistent with the continuation of this public company and consequently the appointment should be stayed while the issue is reviewed."

 Private cites that Johnson has restricted company communication to its own lawyer; that he is responsible for the termination of its SEC counsel, Sam Guzik; and that he removed directors of various Private units, including those from Cine Craft Ltd., Milcap Media Group and Fraserside Holdings Ltd., "installing himself and others as directors in their place."

Another brief also said that Johnson terminated Milton's litigation counsel with respect to the appeal over his personal jurisdiction in the case and refused to indemnify him and board members related to the appeal.

In another high court ruling, Nevada justices also denied a motion by law firm Laxalt & Nomura to withdraw as counsel for Private's independent directors.

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