Enthusiast Gaming’s legal battle against former executive

One of Canada’s leading esports and gaming organizations is in a legal dispute with a former employee. The company accuses him of planning a “calculated hit” against the organization’s CEO.

Late last year, Enthusiast Gaming filed a lawsuit in the Ontario Superior Court of Justice against Thamba Tharmalingam. Enthusiast Gaming is a TSX-listed company headquartered in Toronto. Thamba Tharmalingam, on the other hand, served as COO at that company from 2020 to 2022.

The company is suing Tharmalingam for attempting to oust Adrian Montgomery in an attempt to instill himself as CEO; after convincing senior management to back him.

Legal dispute

Tharmalingam, who the company fired, rejects the accusations and claims that he was fired without justification. He is seeking $5.35 million in severance pay.

On the other hand, Enthusiast asks that Tharmalingam’s claims be dismissed. In addition, the former employee is ordered to pay damages related to the alleged breaches of his confidential duties.

None of the allegations presented by either party have been proven in court. Enthusiast Gaming declined to comment on the legal battle; Tharmalingam’s lawyers did not respond to a request for a statement.

Court case

The court case sheds new light on a 2022 campaign in which Enthusiast’s largest shareholder sought to oust Montgomery and most of the board due to what it considered “significant problems” with the company’s management and culture.

Court documents allege that Tharmalingam assembled a team of his direct subordinates; to draft the letter that Greywood delivered. In the letter, they are calling for the CEO’s dismissal. Moreover, the company claims that Tharmalingam tried to convince the board to appoint him to the CEO position, sending the board a separate statement supporting Greywood’s letter.

In Greywood’s letter, he accused Montgomery and management of squandering the company’s potential in the gaming and Web3 space. The letter expressed concern that board members did not have a sufficient financial stake in Enthusiast.

In addition, they fostered a “culture of division” where they took advantage of staff accomplishments while offloading blame for their failures onto others or forcing management to execute their undesirable actions to protect their reputations.

On the other hand, Enthusiast called the allegations in Greywood’s letter “unfounded,” including claims that Montgomery’s actions harmed shareholder value.

Instead, it claimed that the activist movement had jeopardized Enthusiast’s ability to maintain its financial stability by depressing its stock price and jeopardizing bank financing.

About Enthusiast Gaming

Enthusiast intends to become the largest platform for esports and video game fans worldwide.

It manages some 50 websites containing video game-related material, owns several esports teams that participate in high-level competitions worldwide, and has teams of content producers on YouTube, Twitch, and TikTok.

Its revenue for the most recent quarter, which ended Sept. 30, 2022, rose 17% to $50.6 million. However, its shares have fallen due to macroeconomic headwinds, Greywood’s push for new leadership in the business, and what Greywood claimed were internal governance failures, tripling its net loss from the same period last year to $37.1 million.

On June 29, when The Washington Post article detailing Greywood’s campaign against Montgomery and the board was published, Enthusiast’s stock price fell 3.6%. Since then, the stock has lost nearly 70% of its value.

Although Enthusiast rejected the claims in Greywood’s; letter after it was leaked to the media in July 2022, the company’s board of directors agreed to the investor’s requests for a management shake-up.

In November, the company announced that it had hired a U.S. recruiting firm to assist in the search for a new CEO.

Header: Enthusiast Gaming