Vancouver: A $500,000-plus lawsuit clouded the October announcement of Red Sky Entertainment, the new Vancouver distribution company run by four Alliance Releasing defectors.

The company was unveiled during the Vancouver International Film Festival Trade Forum, with president Tony Cianciotta, vp sales Dave Forget, vp marketing Mary-Pat Gleeson and vp publicity Anna Maria Muccilli saying they’re glad to be living on the West Coast.

At the opening press conference, however, the principals and equity stakeholders did not talk about their financial backing, citing the desire to keep the details private.

However, Red Sky is receiving financial backing from Vancouver-based Western Film Distribution, a so-called Venture Capital Corporation that is supposed to reward its investors with tax benefits through a provincial business development program.

Western Film is 51% owned by Mark Ralston, a principal at Mainframe Entertainment in Vancouver.

The balance of Western Film is owned by vcc investors who allege in a writ filed with the B.C. Supreme Court Oct. 2 that Ralston breached a contract by not creating ‘an eligible small business’ as defined in the vcc program and has not been able to provide the tax benefits to the investors.

The suit claims damages of $500,000 – money paid by investors to Western Film on or about Dec. 1, 1994 – and unspecified damages.

In an interview, Cianciotta said Western Film would one day become Red Sky, but also said he hadn’t heard of the lawsuit, even though the writ appears to limit access to Western Film’s assets. Ralston did not return calls.