Prospective employer contacted current employer

[Dr.Brian]

What a disaster. The GM is a full on dunce.
In my industry people move on, promotions to leadership elsewhere, selling out for the loot, cutting back to a easy paycheck, etc. If word got out you wanted to leave, no big problem.
In my wife’s niche field there is a lot of company flipping in the industry, but there are only a handful of players, and really only 3 in her specific field. They are a nasty bunch and if they knew you wanted to leave for a direct competitor you’d almost certainly be fired. These swap are always on the way down low. Usually the 2-4 weeks notice is met with, “Thanks, but you can leave effective immediately.” That has caused a number of problems over the years, though I’m sure it’s not that uncommon when moving to the competition.
I wouldn’t resign, though not for the unemployment as it pays so little I’m not sure it really matters. Make them fire you if that’s what they want.
If you want to try to mend the relationship, approach things with the current COO as an opportunity for advancement and see if they want to work to keep you. That’s an approach that has worked in my field. Many have used an offer to flex for a better deal at the current gig.
Good luck. If you go to the new job make sure you sleep with that GMs wife at the Christmas party or something to thank him for all your headaches.

PS I wouldn’t share that the current job asked you to resign. I think that weakens your position.