As the dawn of the first picture's premiere was approaching, lawsuits were buzzing around the producers and their associates, "Brando tried to take out injunction against the first picture -- he failed." Puzo's lawyers were also threatening lawsuits. What had the Salkinds done wrong? "Dharmesh, when they get a sniff of a hit, they get worried that they won't get their money. It was difficult, my reputation was on the line, but we settled quickly."

December to February was some of the toughest periods in Ilya's producing capacity, "It was a muddled period, it was all about survival - I was divorcing my first wife, unpleasant articles were written about us, there was the banks and lawyers and we were in the red." The Salkinds have often been called greedy and deceitful but Ilya maintains that he was anything but, "I didn't get what I was entitled to [percentage of the gross] - I could've had a larger percentage if I wanted but I didn't."

It wasn't just lawsuits, the, relationship with Dick Donner, which had soured during production, was now on the verge of complete breakdown, and with the huge success of Superman, Donner was probably sure he was in the position to dictate the terms, as this Variety article suggests:

Reflecting on the film's success before embarking on a series of personals in France, Italy, Germany, Belgium, and Holland at openings of SUPERMAN, Donner also insisted that exec producers Alexander and Ilya Salkind "negotiate in good faith" for the sequel if he is to direct it. "That means no games," Donner elaborated. "They have to want me to do it. It has to be on my terms, and I don't mean financially. I mean control." "A great deal of work remains to be done on the second SUPERMAN." Donner revealed. Although three-quarters of the footage has been shot, and assembled in rough-cut form Donner said, it will take a month for him to review all the dailies and begin cutting again. "I've forgotten the story.", he joked. The death of British Cinematographer Geoffrey Unsworth, who shot SUPERMAN, has caused considerable concern about meshing the visual look of the original with the sequel, but Donner revealed he has asked Peter MacDonald, Unsworth's camera operator for 15 years, to take over the director of Photography spot on Part2.
VARIETY, Jan. 31, 1979

After the fiscal arguments settled, Ilya was looking forward to continuing the saga with Donner and Mankiewicz, "To be candid, some of the material shot wasn't very good, we were going to sit down and rewrite parts of it."

The relationship between Pierre Spengler and Richard Donner was testing at the best of times but mostly unworkable. Donner's quotes in the trades like "They're assholes" worked against a possible reconciliation and supposedly, Donner was misadvised to stay away and not speak to them by his management. Would Donner have seriously not answered the phone?
Ilya is adamant that Pierre attempted to reconcile any differences but Donner has always been firm -- Pierre never called him.

The Salkinds always collaborated with their director and writers, so Donner's public outburst against their work ethic and purview plus an attempt to re-negotiate in the trades backfired, so claims Ilya Salkind.

"Look, he called us assholes, so what, we were prepared to work with him again but when he started criticizing my friend, it became difficult." He continues, "Donner wasn't going to tell us how to make the film, we always collaborate with the director. Lester is a tough director, he knows what he wants, but we ALWAYS collaborated."
In the midst of the production turmoil, the Salkinds returned to South America, "We were in Mexico at the time; Alex was worried about me producing TWO because we went too far over budget. I was absolutely crucified by Alex and the bankers on the first film because we shot so much with Dick but the money was on the screen! We were even thinking about getting Richard Lester as an official producer [Donner still in the frame as director] and downsizing Pierre's involvement."

Unfortunately, Donner makes it clear that he wasn't prepared to work with Pierre in Variety 1979:

Spengler allows that he and SUPERMAN director Dick Donner differed during filming, but he says all's now well and Spengler expects to return to complete SUPERMAN II. Donner, however, declares, "If he's on it - I'm not" …Sounds like a problem for SUPERMAN to solve.
VARIETY, 1979

Ilya now believes that Dick's agent at the time, the notorious Michael Ovitz, convinced the maverick director not to approach the Salkinds, "That Michael Ovitz told Dick not to come back, he convinced him to make a smaller movie." For his agent to dissuade him from contacting the producers seems bizarre, were they holding out for more money? Donner admitted that he was paid his fee in a recent interview. The only logical explanation is that Ovitz's agent convinced Dick that they had leverage to broker a bigger deal with Warner's backing; of course the latter didn't fight for him. Well, another possible scenario for the hat of obfuscation - make up your own minds.

By early March, Donner received the telegram, "Your services are no longer required." Ilya harbours no ill feelings towards the maverick director, "Donner was fantastic on the first film - he was everywhere, day and night." They reconciled their differences on the set of Supergirl in 1984 and when Ilya announced Santa Claus, Donner sent him a personal letter, 'Don't fuck it up and good luck'.

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