Shawne Merriman Sues Lender Over 'Wrongful Takeover' of Lights Out Brand

LAS VEGAS, NV – February 13, 2026 – Former NFL star Shawne Merriman has launched a new fight, this time in a courtroom instead of on a football field. His company, Lights Out® Enterprises, has filed a lawsuit against venture credit firm Applied Real Intelligence (A.R.I.) and its managing partner, Zack Ellison, alleging an illegal and "unconscionable" attempt to seize control of his business empire over a disputed loan default.

The lawsuit, initially filed in Clark County Nevada District Court and since moved to federal court by A.R.I., seeks a Temporary Restraining Order (TRO) and a preliminary injunction to halt what Merriman's legal team describes as a wrongful corporate takeover. The complaint paints a dramatic picture of a lender allegedly overstepping its authority to displace Merriman, the company's founder and CEO, and install its own leadership without due process.

The Alleged Corporate Coup

At the heart of the legal battle is the charge that A.R.I. attempted to forcibly wrest control of Lights Out® Enterprises following a dispute over three months of interest payments. According to the complaint (Case # A-26-937793-C), the lender's actions went far beyond typical debt collection efforts. The filing alleges that A.R.I. and Ellison began "holding themselves out to employees and third parties as controlling management of the Company, directing employees to report to them and issuing public statements announcing a change in leadership."

The complaint asserts that A.R.I. initiated these actions to "clear the path for equity conversion and dilution" by taking steps to remove Merriman as CEO, Sole Director, and Stockholder. The lawsuit claims the lender attempted to amend the company's certificate of incorporation and install Ellison as the sole director.

These moves, the lawsuit argues, were not only unauthorized but caused "significant and irreparable harm and confusion among sponsors, partners, employees, and others." The filing directly challenges the basis of the lender's actions, stating, "The Lender Takeover of the Company by Displacing Merriman as CEO, Sole Director and Stockholder Based on 3 Months of Interest Payments is Unconscionable."

Merriman's legal team contends that the loan agreement does not grant A.R.I. the right to operate the company or displace its management without a lawful foreclosure or court supervision, which they claim has not occurred.

A Dispute Over Debt and Control

The conflict stems from a Loan and Security Agreement established in 2024 between Lights Out XF® Inc., Merriman's successful mixed martial arts (MMA) promotion, and A.R.I.'s venture credit fund. A.R.I. alleges that Lights Out® failed to make timely interest payments for the period of October to December 2025. On January 2, 2026, the fund formally notified Merriman of a default, triggering the series of events that led to the lawsuit.

However, Lights Out® disputes the severity and the consequences of the alleged default. The company's filing notes that it made "continual efforts to repay the debt" and argues that the valuation of the company and its valuable intellectual property "vastly exceeds the amount of the alleged debt." This point is central to their argument that A.R.I.'s aggressive actions are disproportionate and predatory.

The lawsuit draws a critical distinction between a lender's right to protect its investment and the right to assume operational control. "The proxy and attorney-in-fact provisions in the Loan Agreement are security devices intended to protect collateral value, not grants of managerial authority or ownership rights," the complaint states. This legal interpretation will likely be a focal point as the case proceeds, questioning the very nature of the powers granted in the venture debt contract.

Venture Debt's Double-Edged Sword

This high-profile dispute casts a harsh spotlight on the potential risks of venture debt, a popular alternative financing tool for startups and growth-stage companies. While venture debt allows founders to raise capital without immediately diluting their equity, the agreements often contain strict covenants and powerful remedies for lenders in the event of a default.

The lawsuit between Merriman and A.R.I. serves as a cautionary tale for entrepreneurs. It highlights how clauses related to default, management control, and equity conversion can be interpreted and weaponized, potentially leading to a founder's worst nightmare: losing control of the company they built. Legal experts in venture finance often warn that the balance of power can shift dramatically toward the lender if a company hits a rough patch, making the fine print of these loan agreements critically important.

The outcome of this case could have broader implications for the venture debt industry, potentially influencing how loan agreements are structured and how courts interpret the rights of lenders versus the control of founders during disputes. It underscores the critical need for founders to secure experienced legal counsel to navigate the complexities of such financing deals.

Merriman's New Fight: From Gridiron to Courtroom

For Shawne Merriman, who earned the moniker "Lights Out" for his ferocious and dominant play as a linebacker for the San Diego Chargers and Buffalo Bills, this is a different kind of battle, but one he appears ready to fight with equal intensity. After retiring from the NFL, Merriman successfully channeled his fame and brand into a diversified business, Lights Out® Enterprises.

The brand's portfolio includes the Lights Out XF® MMA promotion, which has held over 29 events and streamed 180 fights, demonstrating a viable and growing business. Merriman has a history of fiercely protecting his trademarked brand, having previously engaged in legal disputes with corporate giants like Nike. This history shows his determination to safeguard the value and integrity of the 'Lights Out' name.

This current lawsuit is not just a financial dispute; it is a fight for the control and future of a brand Merriman has spent years building, first on the field and then in the business world. The complaint alleges that A.R.I.'s conduct was not just a contract dispute but was "malicious and committed with reckless disregard to the rights of Plaintiff and Lights Out®." Represented by Ross Goodman of Goodman Law Group P.C., Merriman is seeking not only an injunction to regain undisputed control but also damages and attorney fees for the alleged harm done to his company.