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Psystar Files for Bankruptcy, Ch. 11 - Updated 3Xs |
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Tuesday, May 26 2009 @ 01:48 PM EDT
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Psystar filed [PDF] for Chapter 11 bankruptcy protection on May 21 in the United States Bankruptcy Court for the Southern District of Florida. There was a hearing at 11 AM this morning regarding some emergency motions,
like the amended motion [PDF] for permission to keep using business forms, that kind of thing. I have the filings for you.
It will not surprise you that there were deficiencies in the filings, and the court has given them until June 5 to file correctly. Psystar has begun to fill in the blanks already. Friendly tip: the amended motion to continue using business forms lists the date of the bankruptcy as 2008, so more corrections are likely. The initial filing [PDF] lists 1-49 as the number of creditors, $0-$50,000 as their assets, and $100,000 to $500,000 as their estimated liabilities. They don't expect unsecured creditors to get a thing. They also checked the box that states that they are not "a small business debtor as defined in 11 U.S.C. Section 101(51D)." The creditors listed as owed the most, the top 20 creditors, are their attorney, Carr & Ferrell, listed as owed $88,468.84, and may that be a lesson to them, the IRS, around $12,000, JAMS ADR, some more debt paid for by credit card, I gather (NCO Financial Systems, OCZ, TIMBAR), and -- heh heh -- $120,000 to Rodolfo Pedraza, President of Psystar, an "Officer loan", and finally folks like UPS, FED EX, and DHL.
I've seen a couple of articles claiming that at the hearing we'll find out who the investors were who were backing this adventure. However the same articles are saying that the investors have backed away, so both can't be so. If they have pulled out, Psystar will not have to list them in their filings, I don't think. That may be the point.I think this means we may never know.
Chapter 11 means they are asking the court to let it stay in business, a business that Apple alleges is violating its rights. Asking a court to let you infringe another company's rights is not likely to be a winning strategy in the long run, but as we've seen in the SCO saga, it certainly can prolong the death spiral. I'm sure Apple will have something to say to the court about using bankruptcy protection to continue to infringe its asserted rights, however. How long it takes to work through all that -- well, we'll have to wait and see. In the meantime, I presume this tolls the deposition of a Psystar executive knowledgeable about Psystar's business, which the California court just ordered Psystar to endure on June 3 in Apple's law firm, Townsend & Townsend's, offices in San Francisco.
The list of unsecured creditors [PDF] adds Google and Heartland Payments Systems (no amounts owed them are listed, which indicates they don't know the figure yet but will supply it later) to the list on the initial filing. The docket so far:
Psystar Corporation
Case type: bk
Chapter: 11
Asset: Yes
Vol: v
Judge: Robert A Mark
Date filed: 05/21/2009
Date of last filing: 05/24/2009
1 - Filed & Entered: 05/21/2009 -
Voluntary Petition (Chapter 11)
Chapter 11 Voluntary Petition. [Fee Amount $1039] (Lopez, Lazaro)
2 - Filed & Entered: 05/21/2009 -
Declaration Re: Electronic Filing
Declaration Under Penalty of Perjury to Accompany Petitions, Schedules and Statements Filed Electronically by Attorney Lazaro J. Lopez Esq. (Re: [1] Voluntary Petition (Chapter 11) filed by Debtor Psystar Corporation). (Lopez, Lazaro)
3 - Filed & Entered: 05/21/2009 - Motion for Maintenance of Existing Bank Accounts
Motion for Maintenance of Existing Bank Accounts - Filed by Debtor Psystar Corporation. (Lopez, Lazaro)
4 - Filed & Entered: 05/21/2009 - Motion to Assume/Reject
Motion to Assume Executory Contract - Filed by Debtor Psystar Corporation. (Lopez, Lazaro)
5 - Filed & Entered: 05/21/2009 - Miscellaneous Motion
Emergency Motion Authorizing Debtor to Honor Customer Deposits - Filed by Debtor Psystar Corporation. (Lopez, Lazaro)
6 - Filed & Entered: - 05/21/2009 - Terminated: 05/22/2009 -
Miscellaneous Motion
Emergency Motion For Order Authorizing Debtor to Continue Using Business Forms Filed by Debtor Psystar Corporation. (Lopez, Lazaro)
7 - Filed & Entered: 05/21/2009 -
Corporate Ownership Statement
Corporate Ownership Statement Filed by Debtor Psystar Corporation. (Lopez, Lazaro)
8 - Filed: 05/21/2009 Entered: 05/22/2009 -
Notice of Deficiency Re: Schedules
Notice of Deficiency. List of Equity Security Holders due 6/5/2009. Summary of Schedules due 6/5/2009. Schedule A due 6/5/2009. Schedule B due 6/5/2009. Schedule D due 6/5/2009. Schedule E due 6/5/2009. Schedule F due 6/5/2009. Schedule G due 6/5/2009. Schedule H due 6/5/2009.Statement of Financial Affairs Due 6/5/2009.Declaration Concerning Debtors Schedules Due: 6/5/2009. [Incomplete Filings due by 6/5/2009]. (Covington, Katrinka)
-- Filed & Entered: 05/22/2009 -
Automatic docket of credit card
Receipt of Voluntary Petition (Chapter 11)(09-19921) [misc,volp11a] (1039.00) Filing Fee. Receipt number 5558592. Fee amount 1039.00. (U.S. Treasury)
9 - Filed & Entered: 05/22/2009 - Notice to Filer of Apparent Filing Deficiency
Notice to Filer of Apparent Filing Deficiency: Incomplete PDF Image Attached to the Docket Entry. THE FILER IS DIRECTED TO FILE A CORRECTED **MOTION** WITHIN TWO BUSINESS DAYS. (Re: [6] Emergency Motion For Order Authorizing Debtor to Continue Using Business Forms Filed by Debtor Psystar Corporation). (Covington, Katrinka)
10
- Filed & Entered: 05/22/2009 -
Notice of Hearing
Notice of Hearing (Re: [3] Motion for Maintenance of Existing Bank Accounts Filed by Debtor Psystar Corporation. [4] Motion to Assume Executory Contract Filed by Debtor Psystar Corporation. [5] Emergency Motion Authorizing Debtor to Honor Customer Deposits Filed by Debtor Psystar Corporation.) Hearing scheduled for 05/26/2009 at 11:00:00 AM at 51 SW First Ave Room 1406, Miami. (Antillon, Jackie)
11
- Filed & Entered: 05/22/2009 -
Balance of Schedules and Statements Filed
Schedules Filed: [F] Filed by Debtor Psystar Corporation. (Lopez, Lazaro)
12 - Filed & Entered: 05/22/2009 -
Declaration Re: Electronic Filing
Declaration Under Penalty of Perjury to Accompany Petitions, Schedules and Statements Filed Electronically by Attorney Lazaro J. Lopez Esq. (Re: [11] Balance of Schedules and Statements Filed filed by Debtor Psystar Corporation). (Lopez, Lazaro)
13 - Filed & Entered: 05/22/2009 -
Amended Motion
Amended Motion ([6] Emergency Motion For Order Authorizing Debtor to Continue Using Business Forms) Filed by Debtor Psystar Corporation. (Lopez, Lazaro)
14 - Filed & Entered: 05/22/2009 -
Certificate of Service
Certificate of Service Filed by Debtor Psystar Corporation (Re: [3] Motion for Maintenance of Existing Bank Accounts filed by Debtor Psystar Corporation, [4] Motion to Assume Executory Contract filed by Debtor Psystar Corporation, [5] Emergency Motion Authorizing Debtor to Honor Customer Deposits filed by Debtor Psystar Corporation. [10] Notice of Hearing ). (Lopez, Lazaro) **Modified on 5/26/2009 to Add Omitted Linkage to DE #10** (Cohen, Diana).
15 - Filed: Entered: 05/25/2009 -
BNC Certificate of Mailing
BNC Certificate of Mailing (Re: [8] Notice of Deficiency. List of Equity Security Holders due 6/5/2009. Summary of Schedules due 6/5/2009. Schedule A due 6/5/2009. Schedule B due 6/5/2009. Schedule D due 6/5/2009. Schedule E due 6/5/2009. Schedule F due 6/5/2009. Schedule G due 6/5/2009. Schedule H due 6/5/2009.Statement of Financial Affairs Due 6/5/2009.Declaration Concerning Debtors Schedules Due: 6/5/2009. [Incomplete Filings due by 6/5/2009].) Service Date 05/24/2009. (Admin.)
Update: Here's a late addition to the Psystar BK docket:
05/26/2009 - 16 - Notice of Meeting of Creditors. Meeting of Creditors to be Held on 6/24/2009 at 02:30 PM at 51 SW First Ave Room 1021, Miami. Deadline to File a Complaint to Determine Dischargeability of Certain Debts is 8/24/2009. Proofs of Claim due by 9/22/2009. (Covington, Katrinka) (Entered: 05/26/2009)
Update 2: A bit more. Berger Singerman appearing for Apple. Wow.
05/27/2009 - 17 - Notice of Appearance and Request for Service of Pleadings and Other Papers by Paul Steven Singerman Esq Filed by Creditor Apple, Inc.. (Singerman, Paul) (Entered: 05/27/2009)
05/27/2009 - 18 - Transcript of 5/26/2009 Hearing [Document Image Available ONLY to Court Users]. Redaction Request Due By 06/3/2009. Statement of Personal Data Identifier Redaction Request Due by 06/17/2009. Redacted Transcript Due by 06/29/2009. Transcript access will be restricted through 08/25/2009. (Ouellette and Mauldin) (Entered: 05/27/2009)
And Beta News has a report on the filings and the hearing, including this bit:
Psystar's profits were "diminutive" during the bad economy, it goes on, with the hopes of a turnaround on the horizon. That hasn't happened, and while the company now seeks time and space to make a fresh start of things, its plan so far is to build again around its "valuable intellectual property" -- no doubt a reference to its ability to produce Mac work-alikes. ... which made me smile.
Update 3: Psystar has filed its notice of bankruptcy with the California court, titled Defendant and Counterclaimant Psystar Corporation's Suggestion of Bankruptcy [pdf]. It says this, in part: PLEASE TAKE FURTHER NOTICE that pursuant to section 362(a) of the Bankruptcy Code, the Debtor's filing of its voluntary petition operates as a stay, applicable to all entities, of, among other things: (a) the commencement or continuation of all judicial, administrative, or other actions or proceedings against the Debtor (i) that were or could have been commenced before the commencement of the Debtor's cases; (b) the enforcement, against the Debtor or against any property of the Debtor's bankruptcy estates, of a judgment obtained before the commencement of the Debtor's cases; of (c) any act to obtain possession of property of or from the Debtor's bankruptcy estate, or to exercise control over property of the Debtor's bankruptcy estate. Unlike in the SCO v. Novell case, here there is no judgment yet, other than the discovery order, so I gather Psystar intends to try to resolve this in bankruptcy court, where Apple would get what? Probably nothing it can collect, I'm guessing, because they are an unsecured creditor.
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Authored by: Anonymous on Tuesday, May 26 2009 @ 02:07 PM EDT |
Can't imagine why it would show up as credit-card processing, but JAMS ADR (not
JAMS ARD as you wrote) is an Alternative-Dispute-Resolution company. Mediators,
arbitrators, etc. They used to be called Endispute or something.[ Reply to This | # ]
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Authored by: Anonymous on Tuesday, May 26 2009 @ 02:07 PM EDT |
or am i the only one who did not see this comming?
[ Reply to This | # ]
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Authored by: sef on Tuesday, May 26 2009 @ 02:32 PM EDT |
So, because they filed for Ch 11, all pending litigation is
suspended,
right? Apple can't even continue discovery,
correct?
I predict the
Psystar supporters will say Apple sued them
into bankruptc, while the Apple
supporters will say this is
more sliminess from an already slimy company.
[ Reply to This | # ]
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Authored by: ais523 on Tuesday, May 26 2009 @ 02:34 PM EDT |
In case PJ made a mistake; put your correction in the title. [ Reply to This | # ]
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Authored by: Aladdin Sane on Tuesday, May 26 2009 @ 02:50 PM EDT |
Discuss Groklaw News Picks here. Resist the temptation to take the low
road.
--- "Then you admit confirming not denying you ever said
that?"
"NO! ... I mean Yes! WHAT?"
"I'll put `maybe.'"
--Bloom County [ Reply to This | # ]
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Authored by: Aladdin Sane on Tuesday, May 26 2009 @ 02:53 PM EDT |
Discuss non-topically here. Please avoid ad hominem attacks against Bill
Gates or Steve Ballmer, as they have officially become
boring.
--- "Then you admit confirming not denying you ever said
that?"
"NO! ... I mean Yes! WHAT?"
"I'll put `maybe.'"
--Bloom County [ Reply to This | # ]
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Authored by: Anonymous on Tuesday, May 26 2009 @ 03:36 PM EDT |
Psystar will not have to list them in their filings, I don't
think. That may be the point.I think this means we may never
know.
I'm thinking they may not have to list the backers in the
bankruptcy filings.
However, isn't it possible they could still be forced
by the Lawsuit Court to provide those backers if the appropriate requests are
put in by Apple? Of course, that would be if the Bankruptcy gives the Lawsuit
Court the green light to proceed.
I'm basing the above on the fact they
filed for Chapter 11 protection rather than Chapter 7 liquidation. However,
even in the event of liquidation, couldn't Apple still attempt to "pierce the
Corporate veil" and go after the backers even though the backers have withdrawn?
After all, the damage caused doesn't disappear with Psystar. Just future
damage does.
Note: I'm not speculating on the chances of any of the above
- such as the very low chance of "piercing the Corporate veil". I'm simply
pointing out possibilities that may still exist.
RAS[ Reply to This | # ]
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Authored by: Anonymous on Tuesday, May 26 2009 @ 04:15 PM EDT |
Assuming Psystar wasn't publicly traded, do private companies have to do any SEC
filings? I'd still find it hard to believe that this will let Psystar conceal
its backers, especially since it wants to continue as a going concern.
Otherwise, this is a blank check for Microsoft to fund all sorts of bad-faith
projects. Will any court allow this to become public policy? Curious to know
what recourse Apple has to Psystar's illegal conduct.
[ Reply to This | # ]
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Authored by: Anonymous on Tuesday, May 26 2009 @ 05:37 PM EDT |
1) Take a small business that focuses on selling computer hardware (a
notoriously thin-margin industry).
2) Further reduce your potential market by focusing on a sub-market known to be
8-12% of the total market.
3) Get sued by anybody.
Small businesses are notorious for going under simply because they don't make
enough money to cover their expenses before they run through their initial 'war
chest'. Getting sued simply increases expenses while distracting the owner(s)
from the activities they need to do to actually run their business.
No need to attribute malice to this action. It was fairly predictable from the
beginning, even before Apple filed suit. (Though they probably would have
lasted a bit longer without the lawsuit expenses.)[ Reply to This | # ]
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Authored by: Anonymous on Tuesday, May 26 2009 @ 06:51 PM EDT |
How on Earth can this be allowed under Chapter 11? It should go straight to
Chapter 7. They have assets well under half their liabilities, there is no way
you can reorganise your way out of that. If their assets really are less than
$50,000 then their cash levels must be even lower - how will they even afford
the bankruptcy proceedings?[ Reply to This | # ]
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Authored by: Anonymous on Tuesday, May 26 2009 @ 11:19 PM EDT |
Teh trolls don't seem to have gone into C11.
Tufty
[ Reply to This | # ]
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Authored by: grouch on Wednesday, May 27 2009 @ 04:37 AM EDT |
Heartland Payments Systems is one of the unsecured creditors?
Are they certain?
[Robert]
Baldwin [president and chief financial officer] said Heartland does not know how
long the malicious software was in place, how it got there or how many accounts
may have been compromised. The stolen data includes names, credit and debit card
numbers and expiration dates.
--
Payment Processor Breach May Be Largest Ever
, Brian
Krebs, Security Fix, 2009-01-20
Maybe the malicious software
did other things long before the U.S. Secret Service dredged it out. Maybe
Heartland Payments Systems is actually in debt to a few million credit card
users and vendors, including Psystar and Apple. :D
Let's not
speculate on the possibility of the malicious software having erased some
transactions.
(On another note, totally off-the-wall, the first thing that
came to my mind on seeing "Heartland" in PJ's article was the
Heartland
Institute
which inspired Don Parris to do verbal battle with Steven Titch.
Maybe the two Heartlands are cousins).
'Scuse me while I go recalibrate the
tin-foil in my attic. Pesky rodents seemed to have rearranged
it.
--- -- grouch
GNU/Linux obeys you.
[ Reply to This | # ]
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Authored by: sef on Thursday, May 28 2009 @ 05:15 PM EDT |
Responding to the third update: or they could continue
to sell their
Mac-clones during their bankruptcy period, which
they could extend out for a
significant period of time (see
TSG), and then claim, when they emerge and the
trial
resumes, that any claims to damages that Apple might have
had been so
diluted during the intervening period that it's
too late to do anything about
it.
I'm assuming that Apple will be attempting to avoid that
kind of
behaviour. [ Reply to This | # ]
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