Trial for Control of MGM-Pathe Begins Today : Entertainment: Credit Lyonnais Bank is seeking court approval for its ouster of Giancarlo Parretti.

One of Hollywood’s longest-running dramas goes on location today as the quest for control of economically troubled MGM-Pathe Communications Co. reaches a Delaware court.

The trial, expected to last six days, pits former company Chairman Giancarlo Parretti against his chief financial backer, Credit Lyonnais Bank Nederland. The trial will determine the future course of MGM, which has been battered by a string of box office failures.

The bank, which has taken over MGM and installed a new management team, is reportedly withholding a much-needed cash infusion from the company pending resolution of the case. Credit Lyonnais maintains in a court brief that Parretti “severely damaged MGM’s relations within the film industry and threatened its ability to continue operating as a major motion picture studio.”

In a cross-complaint, Parretti contends that the bank sabotaged his efforts to make a success of the company. Credit Lyonnais turned on him, Parretti asserts, because French officials were angered by his acquisition of Pathe Cinema, a venerable French company.

The controversial Parretti, who spoke of becoming an international film mogul when he acquired MGM for $1.3 billion last year, is considered the star witness at the trial. Also expected to testify are MGM Chairman Alan Ladd Jr. and several top Credit Lyonnais bankers.

The trial is being held in Delaware because MGM is incorporated there.

On Monday, reports surfaced of a possible out-of-court settlement between the bank and Parretti. The Hollywood Reporter, a daily trade publication, said the bank was offering to pay Parretti $25 million to $50 million to sever his ties to MGM. A Parretti spokesman confirmed that talks were held. But another source called the report “absurd,” noting that Credit Lyonnais is already in hot water with French officials for its Parretti dealings.

One of Parretti’s attorneys in Delaware, Dick Sutton, refused to respond to speculation that Parretti would use the trial to reveal MGM financing details that could embarrass Credit Lyonnais. The bank has already reorganized its entertainment division as a result of its problems with MGM.

In its court brief, Credit Lyonnais says it made more than $1 billion in loans to MGM and its parent, Pathe Communications Corp. The bank maintains that MGM soon owed industry creditors more than $70 million because of Parretti’s “mismanagement” of the company.

Credit Lyonnais says Parretti agreed to a power-sharing agreement in return for a $145-million capital infusion, which met MGM’s needs for less than three months. After the agreement, however, the bank says Parretti “sought to undermine and demoralize” the new management.

The bank removed Parretti and two allies from the MGM board in June after Parretti, it alleges, tried to wrest back control of the company at an illegally constituted board meeting.

Parretti has denied any wrongdoing. He says it is the bank that violated the agreement.

“The bank made a very clear and substantial promise to Mr. Parretti in April that they would not act to remove him from office if he would comply with the agreements they entered into at the time,” Sutton said. “He has complied, and they have contrived some amazing claims as a way to simply get him out of office sooner.”

Parretti will ask the court to put him back in control of MGM. Sutton said Parretti, if successful in court, intends to personally run the company on a day-to-day basis.