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PWInsider.com has acquired the 19 page ruling issued by The Nashville Chancery Court this afternoon denying TNA President Billy Corgan's request for a temporary injunction against TNA, Dixie Carter, etc. and resolving the temporary restraining order against them.
In the ruling, Chancellor Ellen Hobbs Lyle wrote that she denied Corgan's request for several reasons.
The Chancellor noted that in order for Corgan to be entitled to a temporary injunction under Tennessee law, he has to show a substantial likelihood of success on the merits of his claim, immediate and irreparable harm, a balancing of the equity in the company in his favor and that issuing the injunction would not be harmful to the public interest.
However, the court noted that Corgan did not prove that TNA's defense is without merit, that a default actually happened under the Pledge Agreement between himself and Dixie Carter, that such a default would rightfully mean that Corgan could gain control of Carter's voting rights and that the amount owed and payable to Corgan has increased due to a corporate transaction. So, since the court was not in 100% agreement with Corgan's claims, they would not file the injunction against Carter and the other defendants.
The Court also agreed with TNA's attorneys when they argued last week that the Voting Rights Provision of the Pledge Agreement between Corgan and Carter was "not implemented in accordance with TN Law" and the TN LLC Operating Agreement, therefore it was "unenforceable" and Corgan could not remove Dixie and the other Impact Venture management members.
On the subject of TNA parent company Impact Ventures being insolvent, Hobbs noted, "there has not been demonstrated a substantial likelihood of success on the merit because of the operative text of the Pledge Agreement 'becomes insolvent' is ambiguous when applied to the facts of record." Since the court rules on hard facts and hard facts alone, they have to go by what the definition of insolvent is in the actual Pledge Agreement. Since that is not spelled out in plain English with hard context as to what would and would not be insolvent, the court will not issue a ruling that the company is since there is no clear definition of what the term means in conjunction with the Agreement.
It was noted in the response that the court "does not adopt" TNA's argument that the potential money coming in from potential "purchasers to buy the LLC or some of its assets refutes the facts and insolvency standards" that Corgan presented. The court noted that because of the unique facts of his case, the usual process that Corgan used and that the court itself might use did not apply. Noting that all the parties entered into the Pledge Agreement because TNA had financial issues, it is therefore hard to define that the company had become insolvent, because the company was already in "financial trouble and distress" when Corgan stepped in, noting that even TNA CFO Dean Broadhead stated on the record that without Corgan's help, "all would have been lost."
In her ruling. Hobbs stated, "Thus, the context of facts of the LLC's financial distress at the time the insolvency default provision of the Pledge Agreement was entered into by the parties in August 2016 creates an ambiguity about the meaning of the text of the provision that a default occurs under the Pledge Agreement 'if' the LLC 'becomes insolvent.' "
So, the court is stating that Corgan cannot prove that TNA is insolvent now because the company was in such bad shape that they entered into the agreement with him and there's no way - at thus juncture - to truly prove they are worse off now than they were in August because of the wording of the agreement.
It was noted that it is "not clearly established on the record" that the Defendants "have breached" their agreement with Corgan "by withholding or concealing information." The court noted that Corgan has a version of the facts and TNA has another and there is no clear proof at this juncture which side is correct. The court noted that Corgan may be able to win at trial if he provides the proper evidence, but at this point, he cannot provide hard proof that they breached his agreement.
The court also ruled that the preliminary evidence filed on record that does not prove that there has been an acquisition of TNA and it's parent company by another party, so there is no current reason for Corgan to be owed the additional Corporate Transaction fee (which is believed, based on statements made in open court last week, to be an additional $900,000).
Corgan is still free to go forward with his lawsuit. That is not dead.
TNA is also still required, contractually, to pay Corgan back his loan of $1.8 million on 11/1. They can still do that.
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