Psystar Financials Don’t Reveal Deep Pocket Company

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Financial records Psystar filed in its bankruptcy case show the company was faced with steep legal fees, but didn't reveal that other companies where funding its court costs. The company found itself on the wrong end of an Apple law suit for selling PCs with Mac OS X installed, and many have been speculating that other companies were funding Psystar's legal defense.

According to documents filed in its bankruptcy case, Psystar owes the law firm of Carr & Ferrell over US$88,000. It also owes $6,800 to Judicial Arbitration and Mediation Services, the mediation firm the company used to try to negotiate a resolution in its legal battle with Apple. All told, the company owes nearly $95,000 in legal fees.

Psystar also owes FedEx $8,000, DHL $12,700, and about $12,000 in back taxes. Along with its legal, shipping and tax debts, company CEO Rudy Pedraza floated Psystar a $120,000 loan, bringing the total up near $260,000.

What isn't evident in the documents, however, are the names of any companies that could have been funding Psystar's defense against Apple. Many have speculated that without outside assistance, Psystar couldn't have come up with the money to pay its legal expenses.

If outside backers were funding Pystar's legal battle, they presumably were hoping the company would win and essentially break Apple's control over the hardware Mac OS X can be installed on without violating user licensing agreements.

While it's possible that Psystar found a way to hide the backers speculators have been assuming were funding the company, the company's required bankruptcy documents appear to make it more likely that the company simply burned through its own nest egg.

[Thanks to Macworld UK for the heads up.]

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Comments

ChoMomma

<tinfoil hat>
1. where did the ‘nest egg’ come from?
2. where did CEO Rudy Pedraza get the $120,000 to loan to the company?
3. why would CEO Rudy Pedraza loan $120,000 to his company knowing full well he would never probably see it again, unless it was passed onto him so he was just laundering the money for some invested third party.

</tinfoil hat>

Lee Dronick

where did CEO Rudy Pedraza get the $120,000 to loan to the company?

Possible a home equity loan.

Tiger

Home equity loan? So in other words, the US taxpayers will be bailing out Psystar too?

Lee Dronick

Home equity loan? So in other words, the US taxpayers will be bailing out Psystar too?

Probably not, but if he did get a home equity loan then he is responsible to pay it back. Maybe he had that much in savings, sold stocks or bonds, or something, I was just speculating.

deasys

Legal fees of $88,000 for this case? Way understated.

Lee Dronick

Legal fees of $88,000 for this case? Way understated.

Yes, that is interesting

zewazir

Is it possible some 3rd party interests are paying some or most of the legal fees directly, thus bypassing Psystar’s books?

I do find it difficult to believe they’ve only gone in debt to the tune of $88,000 covering their defense and counter suits.

mahuti

OWES $88k. That’s different than “SPENT.”

Personally, I think all of the “deep pockets are financing them” stuff is a bit much. New companies pop up all the time with dumb ideas, dumb investors, and generate massive losses. I’ve had clients pay me with money obtained from 2nd mortgages, loans from family members, home equity loans and personal loans from the company heads. There are many people in this country with piles of cash, and bad ideas. I don’t see what smoking gun suggests any different for Psystar. So far, every step they’ve made doesn’t point to a Svengali, it points to a bunch of dumb people trying out a dumb idea, and being hopelessly outclassed. I don’t think their rube-ishness is a game, I think they’re really clueless, and we smug Mac users just can’t believe it.

Terrin

I’m a bankruptcy attorney. You only have to list creditors or current sources of income on a Bankruptcy Petition. If somebody gave Psystar funding that was considered a gift as opposed to a loan, that wouldn’t have to be listed. Further, if the money is no longer being given, that wouldn’t have to be listed either.

Lee Dronick

I?m a bankruptcy attorney. You only have to list creditors or current sources of income on a Bankruptcy Petition. If somebody gave Psystar funding that was considered a gift as opposed to a loan, that wouldn?t have to be listed. Further, if the money is no longer being given, that wouldn?t have to be listed either.

Hmmmmm, the plot is not necessarily thin.

Last week on CNET I read that another MacClone business is starting up. This time the business is in Alhambra California which may mean it would be easier for Apple to go after them. Anyway, if their website, quocomputer.com, is any indication then I would feel that my money would be best spent on a real Mac.

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