Unauthorized Mac clone maker, Psystar, filed a motion to dismiss its bankruptcy case in Florida on Thursday claiming it couldn't afford to simultaneously deal with that filing along with Apple's copyright infringement case in California.
According to Pystar's filing, "To remain in bankruptcy, [it] will need to expend significant time and effort, and incur substantial fees and costs." In essence, the company claimed it can't afford to restructure its debt and deal with the courts at the same time.
An attorney familiar with these types of cases told TMO that Psysatr's filing "lacks merit and credibility."
He added "[Psystar's] argument is simply this: It can't afford to comply with the expenses imposed by the monitoring and reporting requirements of bankruptcy and the expense of defending itself against Apple's infringement case, so it is moving to dismiss its bankruptcy case so that it can afford to defend its self against Apple's claim of infringement and prosecute its counterclaim against Apple for misuse of copyright."
Apple filed a lawsuit against Psystar in northern California claiming the company was violating the Mac OS X licensing agreement with end users, and that it was violating the Digital Millennium Copyright Act with the steps it used to install the Mac operating system on PCs. Psystar asserted that it hasn't been doing anything wrong, and that Apple is abusing its position as the only company making Mac OS X-compatible computers by blocking competition.
Psystar eventually filed for bankruptcy in Florida, citing its mounting legal debt. The filing automatically stopped Apple's case in California, but Judge Mark, the official overseeing the bankruptcy, lifted that stay on June 22, allowing Apple move forward again.
Despite its looming clash with Apple's legal team, Psystar introduced yet another Mac clone this week and bragged that it was ready to take on its Cupertino-based rival. "As you all may already be aware, in late May Psystar filed for Chapter 11 protection. Although this was critical to our continued daily operations, we now are ready to emerge and again battle Goliath," the company said.
The PC maker's bankruptcy dismissal request, however, leaves some unanswered questions. It doesn't, for example, say what changed in the company's finances so that it no longer needs bankruptcy protection. The filing also fails to explain how the company can adjust its debts and repay creditors without bankruptcy protection.
"Without that, it has the appearance that Psystar was using bankruptcy for an ulterior and improper purpose," TMO's legal contact said. "The Motion also does not say whether or to what extent Psystar will make its pre-petition creditors whole. With these deficiencies, Judge Mark will, I think, wonder what Psystar has been up to in his court."
Psystar isn't, however, out of the woods in Florida's bankruptcy court. Judge Mark's hearing on the motion is set for August 4th, and there's no guarantee that he'll approve the request.
Psystar's ongoing legal battle with Apple left many speculating that the company had financial backers in the shadows funding its defense since legal cases like this can be astronomically expensive. Now that Psystar is trying to get out of its bankruptcy case -- and presumably has the money to mount a defense against Apple -- speculation about where the money will come from is on the rise again.
TMO's legal contact added "I think that Psystar could rephrase its argument more accurately by stating 'Since filing bankruptcy isn't going to delay Apple's infringement case, we don't need you anymore, as we have always had sufficient funds to continue operations, while we defended Apple's infringement action.'"
If true, the courts in California and Florida won't look kindly on Psystar, and the company could find itself in legal hot water that goes beyond its dealings with Apple.