We know D.C. Get our free newsletter to stay in the know.

Update, 4:50 p.m.: Fortune has obtained LivingSocial’s charter filing for this investment with the state of Delaware, which demonstrates that the PrivCo report was wrong on at least some portions of the deal. Where PrivCo stated that no equity or stock was part of the deal, Fortune reports that the charter shows that stock was issued. The charter filing also shows that PrivCo was wrong on the form of dividend investors would receive, according to Fortune.

Maybe that $110 million investment in LivingSocial isn’t such good news after all. According to research firm PrivCo, which claims to have scored a copy of the terms between LivingSocial and the unknown investors who provided the additional $110 million, the financing deal was a final chance to save the company from bankruptcy.

The deal was meant to save the daily deals giant from “imminent financial ruin,” PrivCo claims, with the hope that the company can be kept alive long enough to be sold at the end of 2013. The allegedly “oppressive” agreement, its low valuation of the stock, and repricing of previous shares don’t bode well for LivingSocial employees, according to PrivCo:

  • “4,000 employees’ stock is rendered worthless”
  • “Employees’ stock options are worthless”
  • “Founder stock is worthless”

In the PrivCo report, PrivCo CEO Sam Hamadeh claims that LivingSocial was days away from “a total collapse of their company.” The PrivCo reports was picked up by Forbes and the Washington Business Journal, which notes that CEO Tim O’Shaughnessy responded to PrivCo’s report with another company memo challenging some of the research firm’s claims, including whether the funding round was an “emergency” and whether shares were repriced in the deal.

Photo by Darrow Montgomery