Nate Rau

nrau@tennessean.com

A Nashville judge on Monday rejected rock star Billy Corgan's request to gain the voting rights necessary to take over Nashville-based wrestling promotion TNA.

Chancellor Ellen Hobbs Lyle ruled that a loan agreement between Corgan and TNA chairwoman, Dixie Carter, was nonbinding under Tennessee law and therefore he is not entitled to evoke a clause that would have given him control of TNA. Hobbs Lyle also ruled that it is ambiguous if TNA is insolvent, as Corgan argued.

Corgan is best known as the front man of the Smashing Pumpkins, but he’s also an avid professional wrestling fan who has been involved with different promotions in recent years. In 2015, he was hired to the creative team at TNA and became president in recent months.

According to his lawsuit, Corgan gave three loans to TNA this year, the last of which came with strings attached that would allow him to wrestle away Carter’s voting rights on the board of directors and effectively take control of the company. One clause stated that if TNA became insolvent, Corgan could take Carter’s 92.5 percent voting rights.

In financial details kept secret in redacted legal filings, Corgan laid out how TNA could not afford to pay its bills, owed millions to investors, creditors and owed the state of Tennessee unpaid business taxes. The company continues to face a negative cash flow, Corgan argued.

TNA’s attorney Travis Parham argued that the company is not insolvent because there are lucrative offers on the table to sell. In court last week, Parham painted the picture of Corgan as a predatory lender who concocted a scheme to take control of TNA and strong-armed Carter into a one-sided loan agreement.

Hobbs Lyle said the illegal loan agreement and the ambiguous nature of the insolvency compelled her to reject Corgan’s motion for an injunction.

Billy Corgan: TNA savior or loan shark?

“The (relevant section) of the pledge agreement, the court concludes, was not implemented in accordance with Tennessee law and the LLC operating agreement, and Section 6 is, therefore, unenforceable to remove the defendant LLC managers,” Hobbs Lyled said in her ruling. “As to the occurrence of a default by way of insolvency, there has not been demonstrated a substantial likelihood of success on the merits because the operative text of the pledge agreement, ‘becomes insolvent,’ is ambiguous when applied to the facts of record.”

Corgan tweeted that he was not disappointed by the ruling.

"For those asking, I'm in no way disappointed in the judge's ruling regarding TNA," Corgan said on Twitter. "Rather, I'm grateful the judge considered the case. It's important to note is these proceedings have brought forth facts which illuminate business practices I have fought against for a reason. And I suggest that a careful reading on the judge's ruling supports there can be no claim of victory by anyone in a position of authority."

Last week’s hearing painted the picture of a tumultuous time behind the scenes at TNA. According to oral arguments by attorneys, Carter, Corgan, and TNA partners Aroluxe Marketing and Anthem have been in constant negotiations and trying to cut side deals, while the world’s top wrestling promotion, WWE, also kicked the tires on buying the wresting promotion launched by Nashville’s Jarrett family. Anthem owns the licensing rights to TNA's video library.

Corgan’s loan repayment is due Nov. 1, which is why Hobbs Lyle fast-tracked her ruling on the injunction. It is unclear if he will immediately be paid back. The trial revealed that a deal is on the table for TNA to buy out Corgan’s loan with interest and for Aroluxe principal Jason Brown to become CEO of TNA. Corgan also has the right to convert the debt into equity in the company - 36 percent.

“Mr. Corgan understands that temporary injunctive relief is an extraordinary remedy and, due to the nature of the proceedings, he did not have full access to information in the defendants’ possession that bears on the issues in this case,” Nashville attorney Scott Sims said. “Mr. Corgan looks forward to the opportunity to conduct full discovery into these matters and present his case in its entirety to the Court at a later date.”

Parham, the attorney for TNA, declined to comment.

Reach Nate Rau at 615-259-8094 and follow him on Twitter @tnnaterau.