Billy Corgan Suing Dixie Carter: The Battle for Ownership of TNA

[johnbragg]

So I ran this past a lawyer friend (who admittedly is in cyber security, not business law), but he says from the sound of it to him, Corgan is trying to legally take over TNA by forcing Carter and Fite Network out via the insolvent claim. He'd then, upon acquisition, sell the library to WWE (once Carter and Fite were no longer involved) and re-brand in 2017.

Makes sense to me. Sounds like a workaround route to what he reportedly wanted to do prior to Bound For Glory.

Forcing Dixie to do at legal gunpoint what she probably had agreed to do in a handshake agreement.

But, even though I came up with the idea (other thread), I'm not sure that Corgan wants to sell WWE the library. Part of my logic for that was to remove WWE as a competing bidder, but WWE doesn't seem interested in bidding so much as picking up the scraps at auction. (Don't get me wrong--if I own TNA/Impact, I make a deal with Vince. But I'm not Corgan.)

 

[ShinChan]

So I ran this past a lawyer friend (who admittedly is in cyber security, not business law), but he says from the sound of it to him, Corgan is trying to legally take over TNA by forcing Carter and Fite Network out via the insolvent claim. He'd then, upon acquisition, sell the library to WWE (once Carter and Fite were no longer involved) and re-brand in 2017.

Makes sense to me. Sounds like a workaround route to what he reportedly wanted to do prior to Bound For Glory.

If that's what is actually happening out there, it's good for professional wrestling atleast.

I don't get what Dixie wants now after putting TNA in so much trouble. A rebranding in 2017 would be good enough for everyone involved and the rumors of TNA also get suspended. Dixie should already hand it over before screwing everything.

 

[therockiswwf]

Small note: Corgan is allowed to do this because TNA owes him money. He probably doesn't have it stipulated in his contract that he can do this (it's not unheard of to have this clause but it's unusual) so it can only be the debt. If TNA did not owe him anything, he would have no case.

This is a complex issue but simply this is pretty much a way Corgan can takeover. Verbal deals can be just as binding as written agreements (another complex issue) so this has nothing to do with any verbal agreements like others have suggested. This wouldn't be the correct lawsuit for something like that.

 

[GhettoV1]

I have a feeling by dinner time on Monday we will know about TNA's future or lack of.

 

[johnbragg]

OK, I read @tnnaterau's tweets, and also http://411mania.com/ and, most importantly, pwinsider.com

My guesses as to what the judge decides on Monday:
1. TNA is insolvent.
2. Corgan's contract with Dixie Carter, or at least the part that pledges control of TNA as security for the loan, is not valid under TEnnessee law.
3. TNA and Dixie Carter withheld information from Corgan and generally acted in bad faith.
4. Dixie Carter is (was) still the legal owner (manager) of TNA, and is within her rights to sell TNA to Anthem. That entitles Corgan to a Transaction Premium in addition to the money that is due to him by November 1.

I strongly suspect that Corgan's contract to take over TNA will be ruled invalid. The security for the loan(s) was (were) an increasing ownership share in TNA, but the last loan put that number at 36%. The more I think about it, the more I think that the courts aren't going to uphold a contract that pledges corporate voting rights as loan security--that would set up a situation where the minority (36%) owner has voting control of the company over the majority (52.5%) owner.

As for #3, TNA and Dixie defrauded Billy Corgan up and down the block, what remedy does Corgan get for that? I think the remedy is the Transaction Premium. Corgan doesn't have a god-given right to be the owner or the promoter of TNA, no matter how much we want him to be. Dixie Carter is under no obligation to sell to anyone in particular until and unless she signs a sale agreement, barring bankruptcy court.

(I think Corgan's expectation was that he would complete a majority purchase in September, and Dixie was either stringing him along until she found a new pigeon who would keep her on TV, or she got cold feet and turned on Corgan).

So I think on Monday Corgan gets his money back and then some, Anthem buys TNA, and Dixie Carter is back on TV in January.

And then we'll see how long Anthem can keep the doors open.

 

[GhettoV1]

Until Anthem gets tired of losing money and sells TNA to WWE.

 

[It's Damn Real!]

Yeah, John, that's a great breakdown. That's basically exactly what I think is going to happen here. At the end of the day, Corgan will get his money back (for the most part) and will potentially stay on as President (in name only) with whatever end share he has while Carter will remain owner while she continues to buy just enough gas to reach the next gas station until the gas runs out or there are no more stations.

 

[johnbragg]

Yeah, John, that's a great breakdown. That's basically exactly what I think is going to happen here. At the end of the day, Corgan will get his money back (for the most part) and will potentially stay on as President (in name only) with whatever end share he has while Carter will remain owner while she continues to buy just enough gas to reach the next gas station until the gas runs out or there are no more stations.

I don't think he stays on as President--he's fired. HE gets his money, plus extra, but he's gone.

And this is Dixie's last stop, I think. The last two paragraphs of

http://www.pwinsider.com/ViewArticle.php?id=105603

describe a term sheet Corgan submitted as evidence that had Anthem owning 85% of TNA and an Aroluxe employee being CEO.

I expect Dixie Carter to stay on as President, and another run as an on-air character.

Corgan is going to get awarded his money from the court, and TNA has no way to pay without selling to Anthem.

 

[therockiswwf]

My guesses as to what the judge decides on Monday:
1. TNA is insolvent.
2. Corgan's contract with Dixie Carter, or at least the part that pledges control of TNA as security for the loan, is not valid under Tennessee law.

I strongly suspect that Corgan's contract to take over TNA will be ruled invalid. The security for the loan(s) was (were) an increasing ownership share in TNA, but the last loan put that number at 36%. The more I think about it, the more I think that the courts aren't going to uphold a contract that pledges corporate voting rights as loan security--that would set up a situation where the minority (36%) owner has voting control of the company over the majority (52.5%) owner.

It would be unusual for this (referring to your #2) to be a clause in Corgan's contract. This is a legal action minority owners can take if the company is in debt to them and insolvent. It is usually not in a contract but it doesn't need to be. It doesn't matter that he is a minority owner.

 

[MrHashasheen]

http://www.voicesofwrestling.com/2016/10/27/tna-response-billy-corgan-lawsuit/

Here is a quick overview of what is known – and what is not – after the hearing:

1. Billy Corgan does not own ANY shares of Impact Ventures, the parent company of TNA
2. Corgan is only a creditor.
3. Corgan is looking to enforce a share pledge agreement entered into between he and Dixie Carter.
4. TNA is alleging that they are not insolvent and that the share pledge agreement is unenforceable.

Canadian lawyer reviewed the details of the case. He's not up on Tennessee law but he made some educated guesses.

 

[johnbragg]

Detailed rundown of TNA's side of the case: http://www.topropepress.com/news/37421/tna-update-dixie-carter-responds-billy-corgans-lawsuit-claims/

 

[Navi]

I'm a little bit confused here. Does Corgan have any shares in TNA or not? I would assume that the man isn't stupid and if he was going to fund them in any way, shape or form, wouldn't he have had it either written or verbal that he has some stake in the company? So if he has a stake then he might have a claim.

I mean did he just hand over money to TNA and expect nothing in return for doing so? Have any of us seen his contract with TNA or are we all just going on supposition? By rights Dixie Carter is either the stupidest person alive. or one of the most brilliant businesswomen I've ever seen. I suspect it's the former.

For his sake and the wrestlers at TNA I hope he does come out with something and Carter loses it all.

EDIT: I just read the story put out by TNA as a response to the lawsuit filed by Corgan, and it doesn't paint Carter in a good light. She comes off as someone who will do anything to get the show on the air and made empty promises that she never intended to live up too. Some might read it as Corgan basically holding a gun to her head, but she did have the option of saying no and going elsewhere. Sounds to me like she signed on the dotted line and is now trying to say she was forced to do so.

 

[johnbragg]

I'm a little bit confused here. Does Corgan have any shares in TNA or not?

According to Carter and TNA, no. As part of the loan agreement(s), Corgan would have been entitled to 36% ownership of TNA if he was not paid by November 1. TNA and Anthem are ready and willing to pay him, so he has no claim to ownership shares.

According to Corgan, yes. According to Corgan, TNA becoming (or maybe being) insolvent means the Pledge Agreement gives him the right to take voting control of Dixie Carter's TNA shares and take over management of the company. In early October, he sent TNA and Carter letters notifying them that TNA was insolvent, he was taking over, removing Dixie Carter etc as the management of TNA and placing himself in charge.

The pledge Agreement is unclear to us in a couple of ways.
1. Is this sort of agreement (where the creditor has the right to foreclose for reasons besides non-payment of scheduled debt) legal in Tennessee? TNA says no. Obviously Corgan says yes.
2. (If the PA is kosher) What exactly does the PA entitle Corgan to claim--control of Dixie Carter's TNA shares, or ownership of Dixie Carter's TNA shares?
2a. IF it's control of Dixie's TNA shares, well that's weird that the 36% owner would overrule the 50+% owner.
2b. If it's ownership of the shares, that seems to run against the part(s) of the contract where the security for the debt was 36% of TNA.
IANAL, so hell if I know.

(My early October date is shaky--it pretty much has to be after BFG and the Impact tapings where Corgan ran Impact, but I can't find the date right now. It was probably within days of filing the lawsuit.)

I would assume that the man isn't stupid and if he was going to fund them in any way, shape or form, wouldn't he have had it either written or verbal that he has some stake in the company? So if he has a stake then he might have a claim.

From what has come out, he loaned TNA (and/or Dixie Carter) money with the clause that if he was not repaid, he could claim partial ownership of TNA. (There were three rounds of Corgan-lending-money, with the amount owed and the percent at stake increasing each time, say from 10% to 20% to 36%. I made up the first two numbers just to give an example, the third number is the actual amount from somewhere in the documents that came out.)

At the same time, Carter and TNA were also negotiating to sell TNA to some combination of Aroluxe, Anthem and Corgan. And, behind Corgan's back (and probably Aroluxe and Anthem's), there were also feelers sent back and forth between WWE and TNA.

And, finally, according to something Corgan submitted to the court, there was a deal reached between Anthem, TNA, Aroluxe and Carter to sell 85% of TNA to Anthem and put an Aroluxe employee as CEO for 3 years. Oh, and this deal is not being finalized before November 1 in order to avoid paying Corgan a Transaction Premium he's entitled to if someone else buys TNA before his loan gets repaid.

I mean did he just hand over money to TNA and expect nothing in return for doing so? Have any of us seen his contract with TNA

No one has seen the key documents themselves, but wrestling journalists have seen the exhibits Corgan and TNA/Carter submitted, they've watched each side's presentation in open court, and Nate Rau of The Tennesseean ( @tnnaterau ) livetweeted the proceedings.

I think what happened is that Corgan tried to loan-shark TNA, lending them money knowing they wouldn't be able to repay it, and when the loan came due extracting more power and ownership. He did the same thing before Bound For Glory, figuring that Dixie Carter would have to cave and sell him a majority stake so that she could keep at least a minority stake, or watch the company shut down and she's on the hook to Corgan for a personal loan. (I'm pretty sure there was a Corgan-to-Carter loan in there somewhere.

I'm not saying that to criticize Corgan, it was the only way he was going to end up with control of TNA and a spot on television, something Dixie Carter has been unwilling to give up.

Dixie Carter found a bigger shark in Anthem.

For his sake and the wrestlers at TNA I hope he does come out with something and Carter loses it all.

Would you be satisfied with Corgan getting his money back plus extra, and Carter handing the company over to Anthem in returning for Anthem paying off Corgan and everyone else TNA owes money to?

And, would you be satisfied with all that if Dixie Carter keeps 5% ownership, the title of TNA President and an on-screen commissioner role?

 

[johnbragg]

http://www.wrestlinginc.com/ adds the nugget that the amount TNA owes Corgan is $1,800,000, and that the Transaction Premium in the Corgan-TNA contract is 50%, or $900,000.

Not sure from the article exactly how WrestlingInc knows that, or if they're putting 2 and 2 together and maybe getting 4, maybe getting 5 because 2 were double-sized and 2 were half-sized.

EDIT: The source is http://pwinsider.com/article/105636/tna-news-updates-on-carter-corgan-the-future-tv-tapings-the-uk-and-wrestlemania-week.html?p=1

The other big question yet to be answered is whether Corgan not only gets his $1.8 million back but also the "corporate transaction" fee, which based on what was stated in court earlier this week, was 50% of his loan, so that's an additional $900,000 he is looking for. Anthem Media's attorney stated in court they were willing to repay the $1.8 but not the $900,000. It's possible that should the lawsuit move forward, the $900,000 becomes something that is wrangled in court even if/when Corgan gets the $1.8 million back.

 

[Navi]

Would you be satisfied with Corgan getting his money back plus extra, and Carter handing the company over to Anthem in returning for Anthem paying off Corgan and everyone else TNA owes money to?

And, would you be satisfied with all that if Dixie Carter keeps 5% ownership, the title of TNA President and an on-screen commissioner role?

I would just be satisfied to see this whole thing get put to rest and not resurface again for a long time. TNA has been is butt of a lot of jokes as their money woes are very well known. It would be nice to see them have stable financing and hopefully someone who knows how to run this company.

If it means the end of Dixie Carter having anything to do with it then fine with me. Also if Corgan gets his money back, that's a bonus. I have a feeling that once this is behind them then maybe they can get back to the business of wrestling as that is what they are supposed to be doing. Unfortunately all this shit is the front page news as it should be I guess, but it's a shame.

 

[GhettoV1]

I hope by Monday evening this whole Dixie vs Corgan saga finally ends and TNA has been put to rest six feet under.

 

[johnbragg]

I hope by Monday evening this whole Dixie vs Corgan saga finally ends and TNA has been put to rest six feet under.

No, no matter what happens (Corgan gets the injunction which forces Carter to sell to him; or Corgan loses and Carter sells to Anthem) TNA will continue to lurch along, continuing its semi-proud tradition of existence.

 

[johnbragg]

http://www.tennessean.com/story/money/2016/10/31/corgan-loses-legal-effort-take-over-tna/93069526/

Corgan's loan is due tomorrow, so we'll see what happens.

I'm guessing that Anthem offers to repay Corgan's $1.8M tomorrow. Corgan refuses, unless he's paid the Transaction Premium (50%, or $900,000.) Then back to court--possibly bankruptcy court, unless Anthem starts paying off some bills and lawsuits.

 

[rmp0012002]

I can understand Corgan's reasons for looking to take ownership being a fan and running a smaller promotion himself but I don't get why these bigger companies want this trainwreck of a company. Other than money coming in like Sony Six what does TNA really have of any worth?

 

[johnbragg]

I can understand Corgan's reasons for looking to take ownership being a fan and running a smaller promotion himself but I don't get why these bigger companies want this trainwreck of a company. Other than money coming in like Sony Six what does TNA really have of any worth?

1. US TV distribution. There are 300,000 people who watch habitually TNA Impact every week. As opposed to, as a rough estimate, zero people who habitually watch PAragon Pro Wrestling or Global Force Wrestling.
2. International TV deals. Sony Six is supposed to be paying $60M over 8 years to show TNA programming. Challenge UK is paying some significant amount of money.

TNA is on TV, and has managed to stay on TV for a little over 10 years. That's something that groups like World Wrestling All-Stars and XWF never managed, and they had even more name talent than ran through the Asylum for their weekly PPVs.

 

[stingray11214]

Look, if Corgan REALLY wants to invest in a promotion, call up Pat Buck. Call up Dennis Long. Call up those behind CW from Hollywood. There are promotions that will appreciate Billy Corgan's money more than the motley crew that is TNA. Paragon broadcasts on the Fite app, and has distro in Asia (ABS-CBN carries it on Sports and Action Channel, seen in California and Nevada). WrestlePro is TV contract away from breaking through. NY's Tier One Wrestling is more active than TNA is! So, Corgan should say to Anthem, "Give me my money and fuck you". Then, go help REAL wrestling people who LOVE the business. Fans will appreciate Corgan far more.

 

[Weems2k]

So according to the various articles, Corgan's due his 1.8 million by today, and that the majority ownership of TNA is essentially buying him out? Does that mean Billy just walks, and Dixie still keeps her toys? From some of the twitter comments, it would seem that the majority of the locker room respected, and supported Billy way more than Dixie & Co.

 

[rmp0012002]

1. US TV distribution. There are 300,000 people who watch habitually TNA Impact every week. As opposed to, as a rough estimate, zero people who habitually watch PAragon Pro Wrestling or Global Force Wrestling.
2. International TV deals. Sony Six is supposed to be paying $60M over 8 years to show TNA programming. Challenge UK is paying some significant amount of money.

TNA is on TV, and has managed to stay on TV for a little over 10 years. That's something that groups like World Wrestling All-Stars and XWF never managed, and they had even more name talent than ran through the Asylum for their weekly PPVs.

The Sony Six deal is more than I thought but I believe Anthem does tv distribution so as far as tv I think they could get better exposure. I just think these companies paying TNA are not getting a ROI with limited content that is being produced.

 

[rmp0012002]

What are the salaries like in TNA? If they are going to do limited tapings like they do now how do they keep talent?

 

[johnbragg]

What are the salaries like in TNA?

Low, and often paid late.

If they are going to do limited tapings like they do now how do they keep talent?

Short answer: They don't. Look at the Slammiversary card from 2014, and look at who's gone and who's still there.

The limited tapings aren't a financial issue for the wrestlers--most of them get paid per appearance, so it just means that they have 6 appearances in January instead of 2 each in January, February and March.