Claiming that Live Nation violated a previous agreement by selling 17 UK theaters to a rival, Key Brand Entertainment (KBE) is suing the concert and promotion giant to block the deal.

Last month, Live Nation agreed to sell the theaters to Ambassador Theatre Group (ATG) for just over $140 million, but according to KBE’s lawsuit, filed last week in Los Angeles Superior Court, KBE and Live Nation had an arrangement under which KBE would have a chance to essentially be the last bidder on the assets if certain conditions were met. KBE had bought several North American theaters from Live Nation in 2008 for $90 million, and upon the completion of that deal the two sides allegedly entered into the bidding agreement.

“Since July of 2008, Key Brand has, at great expense and effort, made multiple bona fide offers, supported by committed financing, to purchase Live Nation’s UK Theatres, all in the context of, and in compliance with, a bidding rights agreement it negotiated with Live Nation in January 2008,” the lawsuit states.

“After encouraging Key Brand for well over a year to submit increasingly higher offers to buy its UK Theatres and, after contractually obligating itself to provide Key Brand with full and most favorable bidding and matching offer rights, Live Nation – in the final hours or possibly after the close of bidding – unilaterally disclosed information about Key Brand’s bid to another bidder to make sure Key Brand’s final bid would not be the winning bid.”

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KBE contends that under the bid agreement it forged with Live Nation, Live Nation could only accept a bid from a higher bidder if that bid was more than 107.5 percent higher than KBE’s bid. And, KBE alleges that Live Nation informed ATG of what KBE’s final bid was, which allowed ATG to bid slightly higher than the 107.5 percent threshold. The bidding procedure was conducted by investment band Goldman Sachs.

The lawsuit claims that Live Nation essentially rigged the bid process in favor of ATG, which also helped to boost the sale price. KBE’s final offer of about $134 million for the properties, which it believed should have been enough to win the bidding. ATG’s final offer came in late, KBE contends, which allegedly allowed it to learn what KBE’s offer was and beat it. At one point, Goldman Sachs allegedly went back to KBE and said the company could buy the theaters for about $158 million, if it essentially ripped up the bid agreement, but KBE refused.

Over the past two years or so, Live Nation has been selling off assets to pay down debt, and to allow it to better concentrate on its core concert promotion and venue operation business. The sale of the UK theaters is an enormously important step toward maintaining that mission.

“As a matter of corporate policy, we do not comment on rumors, acquisitions or pending litigation,” Michael Hartman, spokesperson for KBE, told TicketNews.

John Vlautin, spokesperson for Live Nation, said the company would not comment on the lawsuit.