The sudden departure of Victor Loewy has left Motion Picture Distribution on shaky ground, amid speculation that New Line Cinema's lucrative output deal could leave with him, and uncertainty regarding MPD's European interests.

Loewy left the chairmanship of Alliance Atlantis Communications' MPD late last month, reportedly after a spat with the board of directors following the firings of CEO Patrice Théroux and Paul Laberge, the distrib's general counsel. His exit puts a cloud over AAC's deal with New Line because of a "key man" clause in their agreement.

In its lone statement on the matter, AAC concedes that an unnamed partnership - presumably New Line - is jeopardized by Loewy's leaving, saying the deal "may be terminated at the supplier's option following Mr. Loewy's departure from the business. Management intends to actively work with that supplier to ensure continuity of the relationship."

According to Ben Mogil, an analyst with privately held Toronto research and investment banking firm Westwind Partners, New Line is within its rights to abandon MPD, a loss that would cost AAC millions.

Loewy is also said to have strong relationships with other important MPD output partners, including The Weinstein Company.

"If the New Line deal goes away... there is a good chance Alliance Atlantis may not be receiving its full dividends [this year]," says Mogil. "People are not realizing how tenuous the situation is, because both parties have something to hold over the other. Loewy is holding over them the fact that New Line is very loyal to him, and [AAC] is holding over him an employment contract."

MPD claims Loewy is bound by a non-compete rule for one year, but that could change, says Mogil, if Loewy argues that his departure was constructive dismissal - essentially that he was forced out.

A report issued by Westwind on July 27 also warns about the "stability" of AAC's European assets, as distributors are reportedly reluctant to offer titles to MPD's European sisters Aurum in Spain and Momentum in the U.K. because of the current turmoil. Increasing competition from Lionsgate Entertainment's growing Euro operation isn't helping MPD, either.

But the marquee issue remains New Line, which has generated big money for AAC with titles including the Lord of the Rings trilogy, which garnered in the neighborhood of $50 million per picture.

"The near-term risk for Motion Picture Distribution is that New Line goes somewhere else, like its parent, Time Warner," says Mogil. "The larger risk is that New Line ends up going to a company controlled by Loewy."

The industry awaits Loewy's next move. His old friend Robert Lantos - with whom he founded Vivafilm, now AAC's Quebec distribution arm, and Alliance Communications - owns half of distrib ThinkFilm. Adding further intrigue are the persistent rumors that ThinkFilm is for sale, a notion not refuted by the distrib's head, Jeff Sackman.

When reached at his office and asked if his company is going into play, Sackman said only, "Everything is for sale."