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While Impact Ventures, Dixie Carter, etc.'s response to Billy Corgan's lawsuit remains sealed as of this writing (about an hour before their scheduled hearing in Nashville, TN), Corgan's response to their claims was filed with the Chancery Court this morning, providing some insight into TNA's defense, although admittedly, not all.
In that response, Corgan stated that "Defendants first attempt to portray Corgan's complain and application for injunctive relief as nothing more than a back-handed grab for power." Corgan responded that he has great passion for TNA Wrestling's talents and fans and that the "last thing" he wanted to do was file suit, but he had done everything he could to avoid litigation. He said that he was forced to file the suit due to the defendants' "repeated willful disregard of their contractual obligations to him" and that documents TNA, etc. produced on their own "demonstrates that defendants have been engaging in an orchestrated effort" to deprive Corgan of those contractual rights.
Corgan noted that the defendants then argued that his application for an injunction should be denied because they "have secured financing to pay Corgan the full amount to which he is entitled." Corgan responded that is false and "defendants have merely obtained a proposal for financing a portion of the amount Corgan is due, and that financing proposal is premised upon conditions that cannot be fulfilled, named obtaining a release from Corgan that is not obligated to provide and will not provide for various reasons." It appears this is in relation to Corgan noting in his Declaration filed today, which PWInsider.com wrote about earlier, that TNA wanted him to release them from all claims in order for Corgan to get his money. Corgan insinuated in his declaration that he may be taking additional legal action against Dixie Carter, etc. and did not want to exempt himself from that possibility by agreeing to any release of claims against the defendants in exchange for his money.
Corgan's response also notes that the defendants are arguing that the provision in his signed agreement with Dixie Carter that would allow him to exercise her voting rights in Impact Ventures is invalid under the Tennessee Revised Limited Liability Company Act and Impact Ventures' Operating Agreement. Corgan responded that the defendants are mistaken and explained that a provision in the agreement allowing him to exercise Carter's rights is the same as a voting proxy, which is "expressly permitted by the Act" and not prohibited by the company's Operating Agreement.
It is also noted in the response that the defendants are arguing that Impact Ventures is "not insolvent." Corgan, noting that the Chancery Court allowed limited discovery, stated that during that discovery period, documents that the defendant produced actually "demonstrate that Impact Ventures is insolvent under any of the applicable tests." He claimed that the defendants have attempted to provide "circumstantially" that Impact Ventures is solvent based on "a jaundiced view of certain investment and asset purchase proposals." Corgan continued, "Even so, Impact Ventures' true debts are higher than any value of its assets even suggested by that circumstantial evidence. Thus, it is clear that Impact Ventures is insolvent and that Corgan is entitled to exercise Mrs. Salinas' voting rights in the company."
The response also noted that the defendants have attempted to brand Corgan as a "predatory lender" with "strong arm loans." Corgan responded that he took the risk of investing "significant sums" into Impact to save it from being "shuttered" and negotiated "at arms-length" to contract terms which all parties knowingly and voluntarily agreed to - and is now seeking to prevent the defendants from reneging on their promises to him. Corgan noted that "adding insult to injury, the documents the Court ordered defendants to produce demonstrate that defendants misled Corgan every step of the way."
The filings include a quote from Dean Broadhead in one of those produced documents noting, "Without the Corgan funding, all would have been lost."
In regard to his appointment at Impact Ventures President, Corgan stated that had he not been given that appointment, he never would have agreed to continue loaning the company money, because he believes Carter and the other managers of the company "had driven the company into the ground." It is noted that documents produced by the defendants show that they never had "any real intention of recognizing Corgan as the company's President in charge of the operations", noting that an email between the defendants and Anthem Media noted, "Mr. Corgan may have an agreement providing him with a title, but in the absence of a document delegating authority to him, it is a vacuous appointment." Corgan noted that he is still waiting to be provided with "even an initial draft" of the employee agreement for him as President for his own consideration.
The response noted that Corgan and the defendants agreed that Corgan had the right to convert his investment in the company into a 36% ownership stake or that he would receive an "additional premium of [redacted] should the company engage in a "Corporate Transaction" (meaning a sale). Corgan claims that all of those rights were based on the defendants "repeated representations" to him in order to get him to invest initially and then continue to invest in the company. Corgan again reiterated that the company had breached its agreement with him by keeping him in the dark about negotiations with third parties.
Corgan makes this clear when he cites that on 9/26/16, he was told that allegations that the company was speaking with WWE was "absolutely not true" when just the day before, on 9/25/16, Broadhead himself had sent a "representative of WWE certain due diligence materials that WWE had requested."
In another citing, it is noted that WWE raised issues about Corgan's "note" over the course of WWE negotiations, which led to Dixie Carter responding, "I intend to pay the loan back in full plus interest prior to selling the company."
Corgan again argued that he should be able to take control of Carter's interest in Impact Ventures because the company is insolvent, noting it took on additional debt to produce the Bound for Glory PPV and TV tapings and that "it had become apparent to Corgan that defendants were never going to allow him to participate in the management of the company, as promised, and were attempting to cut deals to sell the company or its assets behind his back." Corgan noted he then elected to exercise his unconditional right to Carter's interest in the company and replace its managers in order to protect not only his own rights as a significant creditor and potential member of the company, but also in the interests of Impact ventures and its employees and independent contractors.
In producing proof that the company is indeed insolvent, Corgan notes that the company's financial condition significantly deteriorated after 8/11/16, including:
*The aforementioned American Express lawsuit, Audience of One and Bankcredit Capital Finance lawsuits.
*The company being in such "dire straits that it was unable to pay officers' salaries" as of 8/31/16. It specifically noted that Dixie Carter and Serg Salinas are owed in back pay.
*As of 9/1/16, "checks issued to talent bounced", with Dean Broadhead stating in one document, "We owe talent money. We owe employees money. we (sic) many vendors money."
*As of 9/8/16, Impact Ventures was unable to pay its state taxes, leading to the tax lien.
*As of 9/8, the company's operating account was overdrawn by [redacted] yet the company had trade accounts payable totaling at least [redacted.]
*As of 10/3, Impact Ventures was unable to pay vendor "Seismic Sound" a redacted amount, leading them to threaten collection actions.
*The aforementioned tapings that were postponed on 11/1-11/3.
*The defendants not paying talent and blaming Corgan and the temporary restraining order for not paying them.
*Although not dated, it is also noted that the company owes money to a "SRX Consultancy."
Corgan followed up that "Although expressly stated, defendants also appear to argue that they can continue to dig the company deeper and deeper into a financial hole by obtaining additional debt to fund their operations." Corgan noted that even after they secured a loan from MCC Acquisitions in September, it was not able to finance it's production of tapings in October and also avoid the plethora of collection lawsuits and the tax lien referenced above. It was noted, "Simply put, it defies logic to assert that Impact Ventures can somehow make itself solvent by becoming more and more insolvent."
In arguing that the company's assets do not exceed a redacted amount that proves the company is insolvent, Corgan argues that the defendants have not provided the Court with "any direct evidence of the value" of their assets. "Instead, defendants only offer weak circumstantial evidence in the form or investment and asset purchase proposals from Corgan and WWE." Corgan argues that evidence "does not even come remotely close" to proving the company is solvent. Corgan argues that the items the defendants are using as their crutch in the argument are simply proposals and "none of them represent a firm offer that defendants could accept." It was noted a letter dates 6/4/16 from WWE stated that it was a "non-binding indication of interest for discussion purposes." It also noted that an unsigned draft of a non-binding purchased agreement did not explain why WWE reduced it's initial proposal down [the numbers, obviously, are redacted] .
Corgan, in noting that he wanted to acquire an equity stake in the company, notes again that he was never told the true nature of the company's debts that it is unclear if the company ever "advised" WWE what the levels of Impact Ventures' debts were in September 2016. Corgan noted, "If defendants falsely represented to WWE that the company's liabilities were only [redacted] as stated in the June 30, 2016 balance sheet, the evidentiary value of any "offer" WWE may have made would be even more dubious."
There is also a note that in their agreement with Corgan, the company would repay Corgan's loan to them by 11/1/16 and that therefore, Corgan's claims should be denied. Corgan noted that the note has not been paid "and it is doubtful that it will be paid in a timely manner because Impact Ventures, by its own admission, does not have the money to do so." Corgan noted that while the claim is that Anthem has agreed to pay Impact's note to him via an investment of funds, Corgan has not been provided with any documentary other than a "key terms" sheet that requires he agree to be a full release of claims against the company. Corgan has made it clear he will not agree to those terms.
Corgan also argues that they are representing him as simply a creditor when he is not someone just owed a debt but someone with the right to either demand payment or convert his debt into a 36% membership of the company.
Corgan noted that in an agreement from Anthem to invest money into the company, the agreement would see Anthem replace Aroluxe as the top secured creditor in the company, see Anthem repay Corgan's "loss" and Aroluxe agree to be obligated to produce each show for the October and January TV Tapings at a reduced price.
That agreement would also result in Anthem receiving 85% of the company, Aroluxe receiving 10% and Jason Brown of Aroluxe being named the CEO of Impact Ventures for a term of three years. It would appear the final 5% would remain with Dixie Carter. Corgan is claiming that all documentation "strongly supports" his claim that they have all entered into an agreement without his involvement or knowledge. Given that would constitute "a Corporate Transaction", Corgan argues that he is owed more than just his investment and that everyone involved have "colluded to delay the actual signing of their agreement until he is out of the picture so he doesn't get the "premium payment."
So, Corgan is now alleging that the company was working to defraud him of money he would be contractually owed.
With the hearing literally about to begin as I post this, it could get uglier. Stay tuned.
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