On May 26, 2010, Affliction filed counterclaims against Fedor and M1 Global seeking (1) a declaration from the Court concerning whether the Consulting Agreement between Affliction and M-1 is valid and enforceable; and (2) rescission and restitution of the Consulting Agreement. Affliction is seeking $2,400,000 with interest.
The crux of Affliction's claim is that it agreed to pay Fedor $1,500,000 per fight (for Fedor's two fights out of what was supposed to be three with Affliction). Affliction claims it paid Fedor $300,000 per fight under a Fight Agreement with Fedor and paid $1,200,000 per fight to M1 Global under a Consulting Agreement. Affliction claims "[t]he reason for the two agreements, Affliction was told, was for personal tax implications."
Specifically, Affliction claims that the "Consulting Agreement was a sham as there were no obligations created under the Consulting Agreement, other than the payment of $1,200,000 per bout directly to M-1 as opposed to Fedor."
It is on this basis, i.e. that the Consulting Agreement was created in "contravention to an express provision of the [tax] law," that Affliction is seeking to rescind the Consulting Agreement and get back $2,400,000.
I took a quick look at the Consulting Agreement, which is described as a promotional and consulting services agreement, and it certainly appears that there were a number of services that M-1 was supposed to be providing, including, inter alia, "Fighter scouting," "International Bout Consulting," Television Related Opportunities," "International Sponsorship" etc.
I will continue to monitor, but these are serious charges by Affliction.
Fight Lawyer
