NoDQ.com > Indy > Recap of today's Corgan/TNA lawsuit hearing
Posted by Steve Carrier on 10/26/2016 at 03:38 PM

Nate Rau, a reporter for The Tennessean, attended today's court hearing regarding the Billy Corgan lawsuit against TNA Wrestling. Here is his recap that he posted on Twitter:

The hearing is set to begin for Billy Corgan's lawsuit against TNA. No sign of Corgan but TNA chair Dixie Carter is here. Chancellor Hobbs Lyle is here and we're underway. She begins by thanking lawyers and staff for redacting filings that were unsealed Tuesday.

Corgan's atty Scott Sims begins. He says Corgan saved the company on 3 occasions. But TNA didnt hold up its end of bargain. Sims says Corgan and Carter entered pledge agreement that included insolvency cause. Proving this is crucial part of lawsuit. Sims said TNA misled BC about company debts. He says Corgan was named pres but excluded from mgmt decisions. This is a contract dispute Sims says. "Theres no dispute this is a valid pledge agreement." The second question is if TNA really is insolvent. Sims says there is no doubt about that. "We basically have a pledge with a voting proxy," Sims says. TNA argues that a transfer of ownership to Corgan was never approved. Chancellor asking Sims about Corgans desire to remove managers. "Does that fit circumstance of a proxy?" She's pushing back at key argument. Dixie is watching without showing any emotion. Shes following along while Sims argues TNA is insolvent. Lawyers have agreed not to disclose redacted financial details. Sims says TNA fails the "balance sheet test" and the "cash flow test." Sims says TNA "has required new infusions of cash to produce new" Impact shows. It is clear TNA is not paying its bills. They say financial condition was same when Corgan signed pledge agreement. But Sims says Corgan didnt know financial strife facing TNA when he gave cash. TNA is not paying talent. Company blames lawsuit. Sims says thats not true. TNA is insolvent beyond doubt on cash flow test. TNA has 52 pct more liabilities now than June balance sheet, Sims says. And he argues total debts are actually higher. Chancellor asks about short term need for cash vs long term value of TNA. Sims says 1. Cash flow deficit has been in existence since at least June. 2. Pro forma shows 1 year of large cash flow deficits facing TNA. Sims says mgmt has put TNA in ICU at least 5 times this year. Hes referencing frantic cash calls they make after each taping. Sims it is noteworthy they havent produced schedule of liabilities. He implies TNA is hiding something. Sims says unpaid tax bill is unknown. Sims says theres been no efffort to assign value to assets ie video library. Sims referencing WWE negotiations now. He says WWE lowered its first offer. And current offer counts noncompete clauses. Sims says Wwe offer is lower than Corgans estimate of TNA liabilities. Is TNA a solid company worth millions or insolvent company contractually obligated to transfer power to Corgan. Sims just seemed to slip and say $1.8M is owed to Corgan on one note. Ok $1.8M was from Anthem. Thats the company that owns TNA licensing rights to video library. Anthem has issued press release saying it is willing to pay off Corgan and Aroluxe's Jason Brown will become new ceo. Sims just said Carter made offer for Corgan to buy her out. Everyone involved is trying to make a deal Sims says. Sims says Dixie emailed WWE to say she wont sell to them until Billy is out. Winding down Corgans side. TNA lawyers up next.

TNA attorney Travis Parham is up now. He calls lawsuit a scheme by Corgan to take over the company and force out Carter. He says lawsuit has created a creditor crisis and hurt TNA's financial standing. TNA has good will, notoriety, merchandising, licensing and is an international brand. Parham says TNA is a valuable, well known commodity. Carter owns 92.5 pct, Anthem owns 2 pct and Aroluxe owns 5 pct. Parham said TNA anticipated short term cash flow problems and knew its new business model would be a challenge. Parham said cash flow company came to roost this summer and Corgan gave a loan that could be transferred to equity. Corgan lent more money in July and had right to convert loan to 12.5 pct interest. Parham is arguing TNA is not insolvent. A third loan from Corgan came in August, Parham said. But he says Corgan's loans were oportunistic to benefit himself. He says Corgan wanted 22.5 pct in company after third loan and insisted on pledge agreement. Parham said Corgan wanted all principal, 6 pct interest and 50 pct equity kicker as condition of 3-month loan in August. Parham called that deal a 200 pct rate of return that would make a loan shark blush. Parham called Corgan's loan a "heads I win, tails you lose" deal. He says Corgan has resisted efforts to repay his loan. Corgan doesn't want to be refinanced and paid off, because he wants 92.5 pct in company, Parham said. "Whatever risk," Corgan faced, "he's been incredibly well compensated," Parham said. Parham said Corgan offered to buy company the day his loan agreement expired. That would have included paying off Aroluxe. That deal would have given him 52 percent of TNA. "he's now saying company is worth nothing," Parham said Corgan tried to buy TNA last month, then went litigation path when deal fell through. Parham: Corgan did nothing to set up necessary financing for Sept. production. Parham vigorously denies financial details were hidden from Corgan. Parham said Corgan is attempting to cause TNA to default on his own loan. Parham said injunctive relief should be used sparingly. He says Corgan has not suffered irreparable harm. Parham said Corgan wanted to get rid of all managers and appoint himself manager. Parham says Dixies manager rights cant be transferred under the law. Parham said the contract between Corgan and Carter is illegal under TN law. So Carter cant transfer her mgr rights even if TNA is insolvent.

Anthem atty says company is willing to pay off Corgan loan minus transaction premium he says he is due. Hobbs Lyle says her ruling will come on Monday. Court adjourned. Updated story coming soon.

Stay tuned to this page for more updates.

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