To recap quickly: Impact Wrestling is in a whole bunch of financial trouble, they need to sell the company, they owe money to everyone and they’re being sued by TNA President Billy Corgan. Corgan’s lawsuit is largely an attempt to wrest control of TNA away from Dixie Carter, and to that end, the two sides met in court on Wednesday for a hearing.
Corgan himself was not in attendance on Wednesday and was represented by his attorney, Scott Sims. Carter was in attendance, and she and TNA were represented by attorney Travis Parham. This particular hearing was to argue the two sides of the crux of the lawsuit, which is whether TNA is insolvent and if so, whether their agreement (which Corgan claims was to turn over Carter’s stake in the company over to Corgan in the event of insolvency, as per the terms of a loan) is binding.
TNA tried to make the case that Corgan entered into the agreement in bad faith and acted as a predatory loan shark, knowing full well the status of the company and providing his loan expressly to force the leverage of this hostile takeover. Corgan’s attorney insisted his client made the loan attempting to help the company, but was kept in the dark about the true state of the company by Carter and others.
The entire day of the hearing was reported on by the invaluable Nate Rau of The Tennesseean. He live-tweeted the hearing, and then concisely boiled everything down in his article about the day’s events.
Corgan’s attorney, Scott Sims, argued that his client staved off creditors and gave TNA the cash flow it needed to pay for productions on two occasions in 2016. As part of those loan deals, Corgan rose to the title of president, but he wasn’t given operating control of TNA.
For the third loan, Corgan entered into a loan agreement with Carter in which he would gain her board of directors voting rights – 92.5 percent – if the company became insolvent. In court on Wednesday, Sims argued that TNA is insolvent and fails the “cash flow test” because it can’t pay its bills.
There are two legal questions in front of Chancellor Ellen Hobbs Lyle, who is considering whether to grant a temporary injunction that would effectively grant control of TNA to Corgan. The first is whether such a loan agreement is legal under Tennessee law. The second is whether TNA is insolvent.
Parham, TNA’s lawyer, insists that a loan agreement of the type Corgan is suggesting is illegal, and thus the question of insolvency is irrelevant. Legal experts have suggested that Corgan has an edge in this lawsuit, as the judge has granted a retraining order preventing TNA from selling any equity or assets until this matter is resolved, which suggests his argument has merit.
Chancellor Hobbs is expected to make a ruling on Monday. If she decides in favor of Corgan, he will effectively be awarded complete control of Impact Wrestling. If TNA wins the case, Corgan is expected to pursue other avenues of litigation to recoup his loan.
