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CORGAN ALLEGATIONS GET WORSE: CLAIMS TNA HID TRUE AMOUNT OF DEBT, ARE USING HIM AS EXCUSE TO NOT PAY TALENTS, THAT DIXIE CARTER CLAIMED THE COMPANY WAS ABOUT TO BE SOLD AND MORE

By Mike Johnson on 2016-10-26 13:01:00

A number of new documents were filed today prior to the scheduled hearing in Billy Corgan vs. TNA, etc. before the Chancery Court in Nashville, TN.

In a redacted Memorandum filed with the Nashville Chancery Court to explain why he requires a restraining order against the defendants in his lawsuit against TNA, Billy Corgan laid out his argument for why TNA is insolvent and notes that currently, "Impact Ventures' balance sheet shows the company's debts are close to ten times the company's assets." 

Corgan states that the company falls under the definition of insolvent for the state of Tennessee, which describes the term as similar to the definition of the term in the Uniform Commercial Code and the Bankruptcy Act, which states that "insolvent" means having generally ceased to pay debts in the ordinary course of business other than as a result of a bona fide dispute, being unable to pay debts as they become due or being insolvent within the meaning of federal bankruptcy law.

Corgan's push for the restraining order also noted that according to Rule 65 of Tennessee Rules of Civil Procedure, they court is authorized to issue temporary restraining orders "without notice to the adverse party" if "specific facts in an affidavit or a verified complain clearly show that immediate and irreparable injury, loss, or damage will result to the applicant before the adverse party can be heard in opposition..."  The filing argues that since this is a private issue between Corgan and the defendants, it is possible that left unchecked, they will cause Corgan "immediate and irreparable harm."

Also filed today was a redacted declaration from Corgan laying out why he invested in TNA and accusing the defendants of hiding how bad the company's debts were in order to get the investment from Corgan.   In describing his initial loan on 6/10/16, Corgan notes that he was given a "senior secured" promissory note, and was not aware that Aroluxe and Anthem Media Sports and Entertainment had already been granted seniority regarding the debt they were owed. In layman's terms, Corgan invested under the belief he would be first in line to be repaid, only to learn he was actually third in line. Corgan also alleges that he was told by Dixie Carter and TNA Chief Financial Officer Dean Broadhead that TNA had a debt of a certain amount, and was never told the company actually had debts of "over [number is redacted.]" 

So, he is alleging he was misled about the amount of money the company actually owed before he made his first investment. Corgan said he was still never informed of the actual debt when he made his second investment in July and only learned of the actual level of debt in September 2016 when he was provided a company balance sheet (dated 6/30/16) by Broadhead.

Corgan also stated that he learned what the actual debt of the company was "in the course of this litigations through the documents that Impact Ventures produced." While the number of redacted, Corgan wrote, "I did not know that Impact Venture's debts were that high. I never would have agreed to invest additional capital in Impact Ventures had I known the company's debts were that high."

Corgan also stated that he was misled into making his "third and final loan" to the company in August 2016 based on "repeated representation" by Dixie Carter that "acquisition negotiations" were underway with third parties and that an acquisition of the company was "imminent" including a proposed investment from Aroluxe.

Corgan alleged in his declaration that the company has prevented him from doing his duties as President, learned that the company has failed to pay its taxes based on an article in the Tennessean newspaper and that a lien has been filed against the company, and that a number of lawsuits had been filed against the company by Audience of One Productions, American Express, and by Bankdirect Capital Finance, LLC.

The declaration also revealed for the first time that TNA planned to film TV in Orlando on 11/1-11/3 at Universal Studios but the decision was made on 10/25 to postpone those tapings "due to a lack of funds."

Corgan also alleged, "Impact Ventures also continues to not pay its talent, except now defendants are blaming me and the temporary restraining order in this case for lack of payment."  As noted previously on PWInsider.com, talents who worked the tapings in October were next slated to be paid this week.

The declaration included a certification sent to his attorney by TNA's counsel on 10/30/16, including a term sheet (possibly a settlement offer?) that would have required Corgan to give the company a "full release of all claims" against them by Corgan. Corgan wrote, "I will not agree to provide Impact Ventures with a 'full release' as a condition to the repayment of my loan proceeds. I am not required under any of the loan documents to provide such a release in return for full payment. I also believe that I have claims against Impact Ventures and the other defendants that are separate and apart from the claims that I have currently asserted herien, and I am not willing to waive or release those claims."

Corgan also states that he was never "provided" with a proposed draft of an employment agreement in connection to his role as President of the company and that he has also not been provided "with access to the information I would require under the Second Amended Corgan Loan Agreement" that would allow him to make an "informed decision" as to whether to convert his loan into an "equity position" in the company. What that means, as I suspected and discussed previously in PWInsider Elite audio, is that Corgan's loan was similar what a bank would do when it loans money to a film production and the collateral if they are not repaid is that they end up with points in the film and get their money back that way, owning a piece of the pie. Corgan is saying he can convert to a piece of the pie but can't make that decision without information the company won't give him.

Corgan also states that he understands that Jason Brown (Aroluxe) "has undertaken the duties of managing the day-to-day operations of the company", while Corgan has been excluded from those duties despite his title and his signed agreement. Corgan stated that he his under the understanding that Brown has been "planning events for 2017 and negotiating contracts with talent."

More as we get it.

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