Alliance Atlantis’ Motion Picture Distribution has blocked the expected launch of a rival company headed by Victor Loewy with a court injunction, stalling its departed chair until an arbitrator can determine whether his non-compete clause – reportedly binding until next July – should be upheld.

But industry insiders question whether Loewy – whether now or a year from now – would be able to seriously challenge his old company in the short term.

MPD took the injunction to the Ontario Supreme Court in late August, where Justice John Ground determined competition from Loewy would ’cause irreparable harm’ to MPD, and put a temporary block on any plans of a new company.

But even if MPD – which has output deals with New Line Cinema, The Weinstein Company, Focus Features and Miramax, among others – stops Loewy from launching his new company now, it is merely prolonging the inevitable, says Andy Nasr, an analyst with Toronto investment firm Raymond James.

‘Whether it happens now or later, in my mind, is irrelevant,’ says Nasr. ‘Maybe it would give [MPD] time to focus on their accounts and strengthen their relationships… but Loewy is deeply entrenched in the industry and has his own relationships, and the reality is that most of the [MPD] output contracts are up for renewal in 2008 anyway.’

Another analyst, who asked not to be identified, has ‘given up’ on MPD, saying that if AAC – which owns 51% of MPD – doesn’t begin looking at offers soon, it may have no alternative but to itself buy the remaining 49% of shares from the Movie Distribution Income Fund, especially if New Line Cinema opts out of its contract. New Line is believed to have a ‘key man clause’ in its output agreement, which says if Loewy is not with the company, the supplier is free to break its deal.

‘There isn’t going to be anyone interested in buying a business that just lost its largest customer,’ says the analyst. ‘And there is the risk you will lose some other customers down the road, so your best bet is to just keep it internal.’

New Line accounts for a reported 15% of MPD’s annual business. (Snakes on a Plane, a recent New Line film released through MPD, brought in about $2.1 million in 290 Canadian theaters in its Aug. 18 opening week.) New Line is expected to announce where its allegiance lies on Sept. 18.

But Nasr feels that the likelihood of Loewy being able to quickly start up a business that is competitive with MPD – which also encompasses art-house distrib Odeon Films, the highly successful French-language outfit Vivafilm (which Loewy cofounded), Momentum Pictures in the U.K. and Aurum Producciones in Spain – is small.

One Canadian producer agrees that Loewy wouldn’t necessarily steal away a lot of AAC’s business, despite the connections he has made after 30 years in the industry. An upstart firm might not be able to offer the bigger suppliers minimum guarantees on box-office returns that would be lucrative enough to lure them away.

‘It’s about relationships, but it is also about money,’ says the producer.

But one former AAC staffer says Loewy would certainly not have a hard time finding staff for a new company.

‘Loewy is a great leader,’ says the source, who asked not to be identified. ‘He could have a lineup at his door of people who want to work for him, including Alliance Atlantis employees.’

Meanwhile, MPD has also launched legal action against former president and CEO Patrice Théroux and general counsel Paul Laberge for what it calls ‘willfully deceiving’ the MPD board and for ‘breaches of their legal duties.’ Loewy left MPD after his colleagues were fired in July.

The allegations against Théroux and Laberge – outlined by MPD in a statement – say that they ‘engaged in various activities contrary to their contractual and fiduciary duties,’ using MPD money and information for personal gain.

Alan Lenczner, the Toronto lawyer representing Loewy, Théroux and Laberge, shot back with his own statement, saying ‘[For MPDI] to issue a news release before notifying my clients tells me MPDI is more concerned with getting their side of the story in the newspapers, than ensuring justice is served… The allegations made by MPDI will be responded to in the court proceedings immediately.’

Lenczner was not available for further comment.

Last month, U.K. firm Marwyn Investments stated its intentions to acquire MPD for up to $414 million, or between $10 and $10.50 per share of its Movie Distribution Income Fund units. Execs were slow to acknowledge the potential suitor when announcing the Q2 results for AAC and MPD in August. New MPD chair David Lazzarato insists that the company isn’t considering any offers until the results of its ongoing study about the viability of the distribution business are announced later this month.

Income Fund units were trading at just under $7 at press time.

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