Grant Johnson, the recently removed CEO of esports and online betting company Esports Entertainment Group, has filed a lawsuit against his former employer. Johnson, who resigned as Chairman and Chief Executive Officer of the business on December 23, alleges the group’s dismissal of his services represented a breach of his employment contract.
News of the lawsuit was revealed by EEG in a recent prospectus for a share issue. According to documents, Johnson filed a lawsuit in the United State District Court for the Southern District of New York against the company on January 6. Johnson had been asked to resign in December by the company’s board, at the end of a highly unfavorable year for the group, including the possibility of Nasdaq delisting.
The ex-CEO alleges a breach of his employment agreement when it comes to the listed reasoning for his dismissal. EEG had terminated Johnson’s contract “for cause” citing accusations of fraud, wilful misconduct and gross negligence: for this reason, the company did not grant Johnson any severance or any payment for the remainder of his contract, which ran until 2025.
In the lawsuit, Johnson seeks “in excess of $1 million as well as 200,000 shares of common stock,” notes EEG, plus attorney’s fees. “The company believes the claims are without merit and intends to defend against the claims vigorously,” the business said in a statement. The case is captioned Grant Johnson v. Esports Entertainment Group, Inc. 1:22-cv-10861 (SDNY).
The lawsuit claims the accusations leveled against the former Chief Executive are false and, even in the event they are true, they would not represent “for cause” under the definition provided in the contract, which requires “demonstrable and serious injury to the company.” Moreover, documents note that the board of directors had already looked into the issues in April 2022, unanimously opting to not investigate any further at the time.
New CEO Alex Igelman
Following Johnson’s departure, EEG named Alex Igelman as the new Chief Executive Officer, just days ahead of the new year. Igelman has more than 30 years of experience in the gaming industry, and is a gaming lawyer and the co-founder of FairP2P, a self-regulatory organization focused on monetized competitive peer-to-peer skill-based gameplay; and Esports Capital Corp., a bespoke esports advisory firm.
But Johnson’s wasn’t the only recent exit from the company. In SEC filings, the company also reveals Damian Mathews resigned on December 31 as Chief Operating Officer and Chief Financial Officer. “Mathews did not resign as a result of any disagreement with the company on any matter relating to the company’s operations, policies or practices,” EEG said in a statement. “Mathews will continue on in his role as a Director of the company.”
Effective on January 6, EEG announced the appointment of Michael Villani as the Interim CFO, in addition to his current role as the Financial Controller. Villani will also serve as the company’s Principal Financial Officer. He first joined the company in February 2021 and, prior to that, he worked as a Director in the Deal Advisory practice of KPMG supporting clients with technical accounting, buy-side and sell-side transactions, initial public offerings (IPOs) and SEC reporting.
The leadership changes follow a few troubled months for the company, marked by brand closures, a debt default and the looming possibility of delisting. The group’s situation is still in need of improvement: in its latest filing, EEG said the amount of cash it had on hand as of January 12 stood at only $500,000.