On Tuesday, Showtime announced that they had filed papers with the Securities and Exchange Commission of their intentions to put ProElite’s remaining “tangible and intangible” assets up for public auction on November 17th in California. The defunct company currently owes Showtime approximately $4 Million in loans, and has failed to repay it in a timely fashion. Late Thursday evening, ProElite had taken steps to prevent the auction from going through, perhaps hoping to continue promoting MMA events in 2009, but on a much smaller scale.
In a filing with the Securities and Exchange Commission, ProElite states:
“The Company plans to take all appropriate measures to prevent the sale from occurring. Such measures may include raising additional financing, filing a lawsuit enjoining the sale, filing a bankruptcy petition or negotiating a settlement with Showtime. There can be no assurances that the Company will be successful in any of these actions.”
The battle between the two companies started last month when Showtime notified ProElite that it has violated a debt agreement with the company to maintain a minimum of $550,000 of unrestricted funds in its bank account. At one point, ProElite had owed Showtime a total of $6.3 Million.
Obviously, Showtime is concerned with being able to retrieve a hefty portion of their loan back, particular after ProElite’s announcement almost three weeks ago that they were forced to cancel their November 8th event due to lack of funding.
After ProElite announced that they were on the cusp of filing for bankruptcy, most of their fighters exercised a clause in their contract stating that ProElite was in breach of their contract. The clause states that if the organization is unable to keep the fighters working after a 30-day notice, then the fighter has the right to terminate their contract. Most of the fighters’ managers filed notice to ProElite immediately.
However, it has been 17 days since ProElite announced the cancellation of their end of year show, and they still have not filed formal bankruptcy papers with the courts. Most likely they haven’t filed the papers because it would be a clear indication that their fighters will be able to exercise the clause, and void their contracts.
By not filing, it buys ProElite time to try and sell off these fighters’ contracts to other MMA promotions, instead allowing them to walk away for nothing. There is also a slim possibility that they are holding on to these contracts in hopes of promoting MMA events in 2009, but on a much smaller scale.