Psystar Declares Bankruptcy.

  • Posted: 26 May 2009 12:54 PM

    If your backers don’t want to be revealed they take their money away.

    Or is linking to this site too much?

    (re-edited re correcting typo in heading.)

    [ Edited: 26 May 2009 06:40 PM by John Molloy ]

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  • Posted: 27 May 2009 02:05 AM #1

    I’m quite curious who might have been financially behind the company.

         
  • Posted: 27 May 2009 09:41 AM #2

    DawnTreader - 27 May 2009 05:05 AM

    I’m quite curious who might have been financially behind the company.

    Think as part of the process they HAVE to name the investors. June 5th is the date!

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    Posted: 27 May 2009 01:00 PM #3

    Let’s see, if they reveal their investors then they admit the lied to the judge when they said they didn’t keep financial records. If they don’t reveal their investors then I believe they would be admitting that they are violating all sorts of other laws; tax, bankruptcy, etc. dealing with corporate record keeping and reporting.

    These guys have screwed themselves to the wall.

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  • Posted: 27 May 2009 01:57 PM #4

    geoduck - 27 May 2009 04:00 PM

    Let’s see, if they reveal their investors then they admit the lied to the judge when they said they didn’t keep financial records. If they don’t reveal their investors then I believe they would be admitting that they are violating all sorts of other laws; tax, bankruptcy, etc. dealing with corporate record keeping and reporting.

    These guys have screwed themselves to the wall.

    I know very little about bankruptcy law, and laws vary from state to state.  But in the two states I am familiar with private companies are not required to report or reveal who their owners are or their income statement and balance sheet.  They are required to keep a list of investors and the financial records necessary to file tax returns.  Neither of these are public records, though they may be subject to disclosure in a lawsuit, particularly if no other financial records exist.

    I infer that Psystar is claiming they have no such records at all.  While the penalty for not keeping records is probably very modest, I suspect that the trial judge is getting very impatient with Pystar and its counsel.  Even if they are not lying outright, it is very likely that they are not cooperating and are not observing the court rules for discovery.  I am not familiar with California court rules, but in federal court there is something called rule 11 which allows a judge to sanction attorneys who make arguments not supported by evidence.  Lying about the existence of financial records seems to fit that description.

         
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    Posted: 27 May 2009 02:48 PM #5

    The Apple case against them is here in California, the bankruptcy is in Florida. That make the situation more complicated.

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  • Posted: 27 May 2009 09:13 PM #6

    Once a person or company files a petition under the bankruptcy code, that person or company has invoked the jurisdiction of the federal bankruptcy courts, which are a division of federal district court where they are located.  The law, the Bankruptcy Code and the Rules of Bankruptcy Procedure, is the same for all federal bankruptcy courts.

    Unfortunately for Psystar and any investor that is trying to remain hidden, unless there is a basis for a protective order—and quite frankly, I don’t see any such basis—Psystar’s financial backers must be listed publicly on Psystar’s schedule of creditors.  Even without being revealed as required by the Bankruptcy Code and Rules, Apple would almost certainly ultimately discover any of Psystar’s backers through the procedures of civil discovery.  People lie in deposition, fail to produce documents, lie in response to interrogatories, and lie at debtor examinations, and it could be that investors would simply walk away from their rights as creditors by declining to be listed on Psystar’s schedules, but given the talent and resources of Apple’s lawyers, I would advise that neither Psystar’s principals or its investors attempt such deceptions, for the consequences are possible felony convictions for obstruction of justice and/or perjury.

    That Psystar has filed a Chapter 11 bankruptcy is a complicating factor, but Psystar does not have a free pass, because of its bankruptcy, to continue to infringe on Apple’s copyright in OS X.  Apple is entitled to enforce its copyright and its EULA, unless Psystar can prevail in the case.  Thus, the bankruptcy judge must either partially lift the automatic stay to allow Apple’s case against Psystar to proceed, or he must, in effect, take over the copyright case by conducting an adversary proceeding in the bankruptcy court, where Apple and Psystar will continue to litigate the same legal and factual issue but do so in the bankruptcy court.  Frankly, I think this last option is unlikely, as most bankruptcy judges would be reluctant to adjudicate a major copyright case in the bankruptcy court and because the bankruptcy court is not experienced in and is not best equipped to adjudicate a complex intellectual property case.  The bankruptcy judge would also have to master the entire case file, which Judge Alsup has already mastered and on which he, Alsup, has already made several dispositive rulings.  So I think that the bankruptcy judge will return the Apple and Psystar’s copyright disputed to Judge Alsup, after Apple moves for relief from stay and at a procedurally convenient moment.