Grant Johnson, the lately eliminated CEO of Esports Leisure Group, has filed a lawsuit towards his former employer alleging that the corporate’s dismissal of his providers represented a breach his employment contract.
In December, Johnson had been requested to resign by the Esports Leisure Group board. This got here on the conclusion of a disastrous 12 months for the enterprise, together with model closures, a debt default and the opportunity of delisting.
Now, in a latest prospectus for a share situation, the enterprise has revealed that Johnson had sued the enterprise for breach of contract and wrongful termination.
Johnson argues in courtroom filings filed within the Southern District of New York district courtroom that EEG had breached his employment contract in its listed reasoning for his dismissal. EEG had terminated the previous CEO’s contract “for trigger” citing accusations of fraud, willful misconduct and gross negligence.
Having eliminated Johnson for trigger, Esports Leisure Group didn’t grant Johnson any severance or any cost for the rest of his contract, which ran till 2025.
He shall be searching for greater than $1m (£820,000/ €920,000) in compensation, in addition to 200,000 shares of EEG inventory.
Allegations of fraud
Johnson govt said that the accusations had been false, and that even when true, they’d not signify “for trigger” underneath the narrowly outlined definition listed within the contract, that requires “demonstrable and severe damage to the corporate”.
Johnson famous the Esports Leisure Group board of administrators had already regarded into the difficulty in April 2022, and had unanimously opted to not examine additional.
Esports Leisure Group stated it believes Johnson’s claims had been baseless.
“The corporate believes the claims are with out advantage and intends to defend towards the claims vigorously.”
Esports Leisure Group adopted on by stating that the go well with didn’t threaten the corporate “by which an opposed determination may have a cloth opposed impact”, regardless of its already precarious monetary scenario.
Esports Leisure Group funds
Within the enterprise’s Could quarterly report, Esports Leisure Group stated there had been “substantial doubt” about its capability to proceed as a going concern for at the very least 12 months.
In its newest launch, these monetary troubles stay obvious.
EEG stated the amount of money the corporate had readily available as of 12 January 2023 stood at simply $500,000.
iGaming closures and gross sales
In December, Esports Leisure Group stated it had thought-about the sale of its remaining igaming belongings in an effort to play down its money owed.
This got here after the introduced closures of its SportNation and RedZone UK manufacturers which the enterprise stated was as a consequence of “a wide range of causes together with the economics of working a small igaming enterprise within the UK market”.
The manufacturers had been each owned by Esports Leisure Group subsidiary Argyll UK. The operator outlined his plans for winding down the enterprise, which included surrendering his license to the Playing Fee and refunding buyer deposits.
“As of December 31, 2022, roughly $200,000 nonetheless remained to be refunded to prospects,” stated the enterprise. “Going ahead, Argyll UK will adjust to requests for refunds to the extent required by regulation and in accordance with Argyll UK’s phrases and circumstances”.
Esports Leisure Group additionally shed some gentle on the standing of the enterprise’s ongoing sale of its Spanish igaming belongings.
A letter of intent was signed in November 2022, and whereas the deal was initially anticipated to shut in December, it’s now set to shut this month. The whole proceeds are anticipated to be $1m, along with a $1m deposit held by the Spanish regulator.
Esports Leisure Group stated that 65% of the ensuing cash will go to a notesholder after a earlier default on its money owed.
“The sale of the Spanish license is topic to numerous closing circumstances and we can’t guarantee that they are going to be happy. If the sale just isn’t consummated, our liquidity place shall be adversely impacted and this might additional adversely affect our monetary situation and outcomes of operations,” stated the corporate.