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A redacted version of the 41 page lawsuit TNA President Billy Corgan filed against TNA, its parent company Impact Ventures, Dixie Carter, Dean Broadhead and Serg Salinas was officially released to the public today by the Chancery Court in Nashville, TN, revealing a lot of insight when it comes to why Corgan filed suit.
The lawsuit alleges that Corgan initially invested into TNA because "Impact Ventures was in severe financial distress" and that by investing, he was preventing the company from suspending operations and going into "immediate foreclosure" to Aroluxe Media, described as the company's production company. PWInsider.com first broke in April 2016 [Elite subscribers, click here] that the way Dixie Carter's deal was structured with Aroluxe, they were putting out the financial cost of TNA's TV productions and TNA would pay them back installments - and if Carter failed to make the payments, she could lose control of the company. Well, that was the very scenario that, as if turns out, led to Corgan stepping in last June.
Corgan's lawsuit notes that TNA "needed an injection of funds" to pay Aroluxe so that they would move forward with the production of Impact Wrestling episodes in June - so this all took place over Slammiversary weekend, when PWInsider.com first reported Corgan had bought a minority share of the company. Aroluxe also required an additional payment due to TNA "defaulting on multiple payments" prior to this point. The financials were redacted.
The reason Salinas and Broadhead are listed as defendants alongside Dixie, TNA and Impact Ventures is that they are listed as the Managers of Impact Ventures LLC. The lawsuit also alleges that per the Operating Agreement for the company, Dixie Carter is the "sole member of the company" but it is believed Carter owns 92.5%, Aroluxe Media owns 5% and Anthem Media (MCC/Fight Network, etc.) own 2.5%, with the latter two described as "significant creditors in the company."
In July, Corgan again invested money in the company, once again to prevent Aroluxe from foreclosing on Dixie Carter and taking control of TNA. The same happened in August, except by this point an agreement between TNA and Aroluxe had contractually expired, "thereby allowing Aroluxe to foreclose on the company at any time." Due to that turn of events, Corgan's lawsuit alleges that he, Carter and Aroluxe entered into "an amended and restated loan agreement" that saw Corgan agree to make his now-third investment in the company with the company issuing him a "new second priority secured convertible priority note", replacing his previous note regarding what he was owed.
The August Agreement also saw Corgan appointed as President of TNA with Carter, the former President, shifted into the title of Chairman and Chief Strategy Officer of Impact Ventures. It was noted that Corgan "desired" to be President so he could direct and oversee the day-to-day operations of the company and improve it's financial condition. Corgan also stated that Carter, as security for the loan, "entered into a 100% equity pledge agreement" with Corgan, allowing that in the event of default, Corgan would be "entitled to exercise all voting or consensual powers pertaining to collateral."
In layman's terms, the lawsuit claims that Carter made Corgan President and agreed that Corgan would gain 100% control of TNA's parent company if she defaulted on the loan he made, in order to get him to invest this past August - because had he not, Aroluxe would have foreclosed.
The lawsuit claims that the paperwork Carter signed appointed him as the "attorney-de-facto" of TNA had an "Event of Default" occurred under the terms of their agreement - which is referred to in the lawsuit as the insolvency of TNA and/or Carter personally.
In regard to Impact Ventures LLC, the lawsuit describes the company as "insolvent" and that "its liabilities exceed the values of its assets, and that Impact Ventures is unable to pay its debts as they come do in the ordinary course of business." Included were cash flow statements (provided to Corgan on 6/30/16), listed as created by Impact Ventures, that showed a "cumulative cash flow negative of [redacted] for the period from September to December 2016, followed by the period of September 2016 through June 2017.
Corgan claims that despite numerous requests, the company has not provided him with any updated balance sheets past the ones given to him in June 2016 that the company is in a negative balance when debt is compared to assets and that the company's financials have actually worsened since the last balance sheet he was provided. Corgan states that insolvency now results in him needed to be awarded Dixie Carter's 92.5% share in the company.
The lawsuit also noted that there have been "media reports" about TNA negotiating with WWE for a potential sale of the TNA video library. The lawsuit notes that Dixie Carter and Dean Broadhead had each denied that but "Mr. Salinas" (perhaps meaning Serg Salinas, or perhaps a typo referring to Dixie Carter) acknowledged the conversations to "the company's wrestlers on October 2, 2016", which would be Bound for Glory.
Based on Corgan's agreement, he claims in the lawsuit he is entitled to a full review of the company's "Officers, counsel, books, records; the full ability to investigate the company's titles to property and to the condition and nature of its assets, business and liabilities" as well as full opportunity to review the company's business plan with "key officers." Corgan is alleging that despite numerous requests, he was given no information about discussions with World Wrestling Entertainment - despite the fact he is President and a creditor to the company and the library is the company's "most significant" asset. He is claiming that is a breach of the agreement he signed in August.
Corgan is also claiming he has been kept in the dark in the company's conversations with Anthem Media (Fight Network/MCC Acquisitions, etc.) leading up to the recent loan [amount redacted] "and it's financial impact on the company" until after the transaction had already been completed - again despite the fact he is President and a creditor to the company.
In the lawsuit, it is noted, "This recent conduct is consistent with the way Mrs. Salinas [Carter] and the other members have dealt with the Plaintiff since the inception of his involvement with Impact Ventures. They have failed to keep Plaintiff apprised of matters of great significance to the company; they have routinely misled plaintiff as to the company's finances, operations and future prospects; they have failed to provide the plaintiff with information necessary to discharge his duties as President to manage the day-to-day operations of the business; and they have regularly interfered with, subverted or ignored plaintiff's authority to manage affairs in the company." Corgan alleges these failures constitute an additional default in his agreement with Carter.
Corgan states in the lawsuit that Carter was informed of an "Event of Default" on 9/29 (this would be the day before MCC Acquisitions financed the Bound for Glory PPV and subsequent TV Tapings) but the defendants did not respond affirming or denying the "Event." Corgan then informed Carter and the company on 10/12 that he was exercising his right to take over her stock in the company and place his own designated managers in charge of Impact Ventures. He received no response.
Corgan's lawsuit states, "The company is continuing to flounder and has been taken to the brink of financial collapse under Ms. Salinas and the other managers. The company's secured creditors, including Aroluxe and Anthem, can foreclose at any time."
In the lawsuit, Corgan is seeking a declaration from the court that he is indeed entitled to Carter's 92.5% of the company, her voting rights and has the ability to replace the current managers with designated managers of his choosing. He is also seeking damages, to be determined by the court, for the breach of contract, and requesting an injunction preventing the defendants from making business decisions that could further harm Corgan and the company as well as preventing them from attempting to sell the company or it's assets until the lawsuit is resolved.
As noted yesterday on PWInsider.com, TNA did file a response to the allegations. That response remained sealed. Corgan filed some additional documents today to support his claims, but those documents are currently sealed by the court as well.
A hearing regarding Corgan's request for a temporary injunction against the defendant is scheduled for tomorrow 10/26 at 1 PM Central. That should prove to be a most interesting hearing.
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