Busy afternoon. Just now catching up on this news.
Several very interesting issues.
So, without seeing the docs themselves, it's pretty much impossible to say one way or another what the likely outcome will be. Without seeing the agreements, I'd say both sides should probably be concerned. Plus, you just really never know for certain what a judge or jury will decide.
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Originally Posted by Noid
Fascinating. I can't wait to hear what Z says about this.
I've glanced through this, but am I right in summing it up as TNA tried to use Corgan for cash, agreed to allow him to have power, but when he tried using that power, people panicked, have tried not to honor the deal, and now there are companies trying to pay out Corgan to leave?
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Sort of, Noid.
So, here's the case as I understand it now. Corgan
and TNA agreed that Corgan would make 3 loans to TNA, and in exchange, Corgan would be named TNA President and would oversee TNA's daily ops. Corgan could also elect to get up to 36% of company ownership instead of his loan repayment. For the 3rd loan, Corgan
and Dixie agreed that if TNA became insolvent and couldn't repay his loans, Corgan would get all of Dixie's 92.5% ownership interest in TNA.
Seems like today, in addition to the temporary injunction, they were arguing pre-trial motion(s) to dismiss the case before it gets to the jury, with TNA alleging the case should be dismissed because Corgan's agreement with Dixie is illegal and even if it is legal, he's not entitled to her shares because TNA is not insolvent.
Corgan is claiming this agreement
with Dixie was a
pledge, which is important, and you will see why shortly. Corgan is claiming TNA is insolvent and as a result of his alleged pledge agreement with Dixie, he's now entitled to all 92.5% of her ownership shares. Corgan is also claiming that TNA is insolvent, and that if TNA wasn't insolvent they wouldn't be trying to sell, would pay talent, wouldn't need loans, etc.
TNA is claiming the agreement
with Dixie is legally something known as a "general assignment". For simplicity's sake, TNA's arguing it's essentially a contract, and NOT a pledge like Corgan is claiming.
Under TN statutory law, if it's a "general assignment", that type of "contract" forcing Dixie (as the "debtor") to give up ALL of her property (i.e., shares) for the benefit of Corgan ("creditor) would be illegal and voidable. IF like Corgan claims, his agreement with Dixie is deemed a pledge though, that's not illegal under TN law and he would still be potentially entitled to all of her ownership interest.
TNA is also claiming they're not insolvent and the need for the recent loans from Corgan and others was just a temporary cash flow problem, the company can't be insolvent and has value because people want to buy it, and that they're willing to pay off what they owe Corgan's for his loans. They also say that TNA must not be bad off enough to be deemed insolvent if Corgan wants to own it so bad.
If the chancellor finds that TNA is NOT insolvent, she could dismiss the case. If the chancellor finds that Corgan and Dixie's agreement is a "general assignment", she would have to void the contract which would also end the case.
Also, the actual temporary injunction issue being decided on Monday is pretty important. IF the temporary injunction is denied, Dixie could sell all or any part of TNA at anytime in the future, even if the case continues.
Again, without seeing the docs, it's basically impossible to say what will likely happen here. Even if we had them, you just never really know.
Quote:
Originally Posted by Dark One
Z, is there legitimately like some kind of 'bad faith' clause they're trying to leverage here?
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No, but every contract has an implied duty of good faith. That is, by signing the contract, both parties agree that they will perform their contractual obligations in good faith.