After trading barbs in court filings and public responses, Back9Network and its co-founder and former CEO Jamie Bosworth have agreed to settle their dispute through arbitration instead of in Connecticut Superior Court.
Back9 filed the lawsuit against Bosworth on Dec. 22, 2014. In its complaint, Back9 claimed Bosworth had violated the terms of a July 30, 2014 agreement that led to Bosworth's resignation from the company. In exchange, Bosworth was due one-time, lump-sum payment and 45 days of salaried pay. The company accused Bosworth of public defamation of the company and its leadership to employees, current and potential investors, as well procuring proprietary financial information and disseminating it to third parties.
The filing also claimed Bosworth had sought out an investigative reporter and promised to deliver damaging information about the company's finances and activities.
Back9 claims Bosworth ignored a cease-and-desist letter sent in October 2014, responding by sending “a rash of text messages” to board members, investors and potential investors making disparaging remarks about “management, programming, brand and creative plan.”
Bosworth fired back at Back9, claiming in filings he was pushed out by current Back9 Board of Directors chair Sanford Cloud, who befriend Bosworth and leased the company's first headquarters to Back9. Bosworth claims Cloud promised he had procured a $10 million capital investment predicated on Bosworth's resignation -- funding Bosworth claims never materialized.
Hartford-based Back9Network missed payroll for non-hourly employees on Jan. 9, which was paid a week later. Company officials claimed it faced a cash flow issue pertaining to kickback payments from DirecTV on advertising sold for the network. Lawyers for former company executive Robert Abbott have claimed in court documents that Back9 is paying DirecTV an annual fee of $7 million to air their programming. Back9 has not disputed that claim.
After the PGA Merchandise Show on Jan. 26, Back9 announced it was laying off 41 percent of its workforce in a cost-cutting measure that keeps it in compliance with conditions on some $5 million in state-provided funding. Connecticut Republicans smell blood in the water and are looking into the terms of the loan set forth by Democratic governor Dannel Milloy and the state's Department of Economic and Community Development.
Sources indicate the company is seeking out an indeterminate amount of money to keep the company afloat, and that such an investment may come with a change in ownership. If the company fails to procure funding, Back9 may be forced to close and sell its assets in an effort to salvage investors' positions.
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