A report by the Media Daily News indicates that the remaining staff of ProElite, the parent company of EliteXC, intends to mount a legal challenge against Showtime, which intends to auction off the company’s assets to the highest bidders during a planned public auction in Los Angeles on Nov. 17.

“With Showtime primed to sell its assets, a mixed martial arts promoter isn’t going down without a fight. ProElite, which has aired MMA matches on the pay cable network, said Thursday that it plans to block the public auction,” the Media Daily News report states.

Showtime’s position is that it can take possession of ProElite’s assets due to the company defaulting on approximately $4 million in loans (and a total debt of $6.3 million) it received from Showtime and has failed to pay back in a timely fashion. At the time of the loans, ProElite had to agree to various conditions that it had to remain in compliance with, one of which was that it could not have less than $550,000 in liquid funds in an account with a major national bank. It’s believed that Showtime wants to sell of ProElite’s assets in order to recoup some of the money it loaned out.

Despite laying off the vast majority of its employees on Oct. 20 and canceling a planned event for Nov. 8 in Reno, Nevada, it appears ProElite still has its sights on continuing as a company. At the time of the cancellation, then-EliteXC Manager of Fight Operations J.T. Steele notified Nevada State Athletic Commission executive director Keith Kizer that the company was not only cancelling the Nov. 8 event, but that it would also be shutting down operations. Many ex-employees have also indicated to FiveOuncesOfPain.com that that they had been told by ProElite’s upper management that they would be filing for bankruptcy. However, it’s now two and a half weeks later and formal bankruptcy papers have not been submitted to the courts.

Caught in a state of limbo, several major managers representing some of the company’s top fighters have tried to escape their EliteXC contracts by citing a material breach of a clause titled “Article 47” and exercising “Article 43” in the contract, which gives ProElite 30 days to cure the breach. ProElite has offered its cure of the breach by informing several managers and fighters that they have every intention of promoting events in 2009.

The report of ProElite continuing as a company was initially met with great skepticism but FiveOuncesOfPain.com has spoken with several sources in recent days that have revealed that ProElite has formulated a plan to promote shows again as a restructured company. According to the sources, ProElite executives have even gone so far as to suggest that CBS has pledged millions of dollars in rights fees to the company should it resume shows.

Despite ProElite’s signaled intentions to continue, it remains to be seen just how realistic those intentions are. FiveOuncesOfPain.com contacted sources within CBS and Showtime who, speaking on the condition of anonymity, dismissed any possibility of CBS ever doing business again with ProElite. MMAPayout.com’s Robert Joyner also broke the news on Thursday that the California State Athletic Commission has suspended the company’s promotional license.

Sources indicate that tensions between ProElite and CBS/Showtime have existed for quite some time and have gone past a boiling point in recent weeks. It is believed that the companies are diametrically opposed on several major legal positions and that litigation is probable.