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Dispute between Scooter Braun and Troy Carter’s companies intensifies

By | Published on Thursday 11 October 2018

Troy Carter

The legal battle between Scooter Braun and Troy Carter is intensifying, as Braun’s company applies for an injunction to effectively freeze the bank accounts of Carter’s companies. Braun’s Ithaca Management Holdings accuses Carter, his wife and his Atom Factory company of fraud and breach of contract.

It was originally reported that the dispute related to a $10 million loan to Atom Factory. In Ithaca’s latest legal filing, it says that the original loan in June 2016 was for $26 million, and that $14.5 million remains outstanding.

The issue of repayment seems to have come to a head after Atom Factory settled a legal dispute with another unnamed party – according to Billboard sources, this was former Atom Factory client Lady Gaga. Under the terms of the deal, says the original lawsuit, if this other dispute was settled, any money received by Carter’s company should have been transferred to Ithaca as payment on the loan.

However, Ithaca claims, that dispute was settled in March this year but no money has been handed over. It alleges that proceeds from the settlement – over $10 million – were instead diverted to other recipients and never reached Carter’s holding company, AFACT, which is the entity liable for the payment to Ithaca.

Ithaca says that, had AFACT, handed over $10 million at that point, it would have considered the whole matter over and done with. But instead, it claims, Carter intentionally hid that money in an attempt to make it look like AFACT couldn’t afford to pay off the loan.

When a deadline of the end of August was missed – despite “repeated assurances” that it would be met – Ithaca says it demanded full repayment of the outstanding $14.57 million on the loan. It went legal, it says, after Carter’s company refused to allow an audit in early September.

Ithaca is now seeking an injunction to “prevent debtors from placing property which legitimately should be available for the satisfaction of demands of creditors beyond their reach”. It also wants the case fast tracked – bringing forward a hearing currently set for May. Carter’s lawyers have said that will oppose any date set within the next 60 days.