Unsealed Billy Corgan Lawsuit Documents Shed Light On Why He’s Suing TNA
This afternoon, Chancellor Ellen Hobbs Lyle of Nashville Chancery Court officially unsealed most of the filings in Billy Corgan’s lawsuit against TNA parent company Impact Ventures LLC. The only documents still hidden from public view are the initial complaint and the memorandum that Corgan filed to get a temporary restraining order against TNA. Those will be re-filed publicly on Wednesday (October 26th) with certain sections redacted, but everything else was made public today.
Of what came out today, two filings are especially noteworthy:
The restraining order is about what you’d expect: It stops TNA from “taking any action without the consent of” Corgan (like signing new contracts), as well as selling the company, its videotape library, other assets, etc. On Wednesday, there will be a hearing to determine if Corgan will get a injunction to replace the temporary restraining order.
The motion to compel discovery (or rather, the responses to previous requests attached as exhibits) is where we get the most information about the lawsuit so far. Based on the questions that Corgan asked of both Dixie Carter and Impact Ventures, as well as how they were answered, this is what appears to be going on:
- Corgan and TNA (for the purposes of this article, TNA = all of the defendants unless otherwise noted), entered into an “equity pledge agreement.” The date of the agreement was possibly August 11th, as TNA claims to have not been insolvent since then . That was also 11 days before TNA’s debt to Anthem Sports and Entertainment was filed with the state of Tennessee.
- If TNA defaulted/became insolvent, Corgan would be able to take over the voting rights to Dixie Carter’s shares. From there, Corgan could then “remove the managers of Impact Ventures and replace them with designees of [his] choosing,” as he would, for all intents and purposes, be the majority owner. This likely explains why Corgan loaned money personally to Dixie Carter, and, really, this was the only way that move made sense.
- On September 29th, the Thursday before Bound For Glory, Corgan notified TNA that he was exercising his rights under the agreement because there had been “multiple events of default under the equity pledge agreement.” This was two days after Audience of One Productions sued TNA, which makes you wonder of the former tipped Corgan off. It was also the same day as Corgan’s cryptic interview on The Dan Le Batard Show, which is embedded at the top of this article. One day later, TNA’s debt to MCC Accquisitions (sister company to Anthem/Fight Network) was filed with the state of Tennessee.
- TNA denied being insolvent, saying that “The term ‘insolvent’ is not defined in the Pledge Agreement. Under Tennessee law, an entity is insolvent only if the sum of the debtor’s debts is greater than all of the debtor’s assets, at a fair valuation. Impact Ventures’ assets are of greater value than its debt, […] There has also not been an Event of Default as that term is used in the Pledge Agreement.”
- TNA objected to a request for all documents showing the company’s inability to pay any debts in full, “because it theoretically seeks all correspondence, financial documents, vendor invoices/statements, and other documents concerning any instance in which Impact Ventures may have been late and/or obtained an extension with regard to paying a debt in full, and any such documents are not maintained in a manner that would enable Impact Ventures to readily obtain such information[.]”
It would seem that, once TNA denied being insolvent and refused to let Corgan take over, he started preparing for the lawsuit. This ostensibly included filing Carter’s debt with the state of Tennessee on October 11th, the day before he sued. Since Carter/TNA said in sworn statements that TNA is not insolvent in spite of mounting evidence otherwise, and it would be wrong to assume that anyone is committing perjury, there’s only one logical explanation as to how that could be truthful. That would be that TNA valuing the company’s most subtantial asset, the video library, at more than Corgan thinks it’s worth.
Based on what WWE normally pays, the library is worth about $1 million, but TNA is more than $4 million in debt based on public records, which don’t include their debts to Corgan, the state of Tennessee, or any staff/performers. When you factor in that Dave Meltzer has reported that Anthem owns at least part of the video library now, it makes you wonder if they made a deal where TNA can point to a valuation of the collection at much more than $1 million. Otherwise, it doesn’t really track how TNA could not be considered insolvent right now.
Also: For what it’s worth, TNA’s income from its TV deals with Challenge TV in the U.K. and Sony Six in India would be classified as receivables and not assets.
Some other notes from the filings:
- For the record, TNA Entertainment LLC (TNA’s old parent company) is a wholly owned subsidiary of Impact Ventures LLC (TNA’s current parent company).
- For most, if not all of the documents Corgan asked Carter and TNA to produce, it was alleged that he already had access to them. This includes TNA’s communications with WWE in 2016. Before he filed the lawsuit, Corgan was cryptic about how he didn’t know about any such deal even though he should, so TNA’s position is interesting, to say the least.
There’s clearly a lot more to this that we still don’t know. Depending on what exactly is redacted from what is released on Wednesday, we may learn a lot more.
source: David Bixenspan
