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Psystar bankruptcy linked to legal costs

updated 09:50 am EDT, Thu June 4, 2009

Psystar bankruptcy cause

Legal costs account for the bulk of Psystar's outside debts, court bankruptcy documents reveal. Having filed for Chapter 11 protection late last month, the company has been forced to disclose what it owes and to whom. While the greatest amount of debt is situated in a $120,000 loan from the company's founder, Rudy Pedraza, another $88,000 is due to Carr & Ferrell, the lawfirm that has represented Psystar in its battles with Apple over Mac cloning. The firm has intellectual property experience and has successfully dueled with Apple in the past.

Another $6,800 is owed to Judicial Arbitration and Mediation Services, which handled the alternative dispute resolution process Apple and Psystar were both ordered into by the court. Just under $12,000 remains due to the IRS, while $8,000 and $12,700 belong to FedEx and DHL, respectively, which have run deliveries for Psystar.

In its petition for Chapter 11 the company does not cite legal costs as the main cause of bankruptcy, but rather a "weakened economy," leading to decreased sales. Also blamed is the effect of the recession on suppliers, some of which are said to have been unable to deliver parts -- "forcing Debtor [Psystar] to pay higher prices for parts in order to fulfill customer orders in a timely manner," the petition reads. The company is nevertheless promising to come out of bankruptcy with increasing profits, and pay for all debts and customer support.

The next milestone in Chapter 11 proceedings is Friday, when Psystar is obligated to hand over tax returns and a financial statement.




by MacNN Staff

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Comments

  1. moofpup

    Joined: Dec 1969

    +4

    Duh!

    What did they think would happen when they decided to pursue this idiotic legal strategy? Did they think they could outspend Apple? The whole premise for this Company from day one, made no sense. What a waste!

  1. Salty

    Joined: Dec 1969

    +2

    Hmmm

    Well apparently they aren't being bank rolled by Dell.

  1. Herod

    Joined: Dec 1969

    +1

    three letters...

    L O L

  1. c4rlob

    Joined: Dec 1969

    +1

    buh-bye Psystar!

    I seriously hope this is just the beginning and this draws more attention to fabricated and predatory lawsuit practices.

  1. malax

    Joined: Dec 1969

    -3

    mixed up

    Don't confuse your companies-that-Apple-tangles-with-in-court. This isn't one of those Marshall, TX predatory law suit things. This is Apple smacking someone around for selling Mac clones within a license.

    Also, as someone pointed out in an earlier thread: the liability disclosures can't prove that Shyster didn't receive outside funding. If this really was some sort of test case funded by Dell or someone, the start up money could have been a gift rather than a loan on investment. Seems a bit far-fetched to me, but technically possible.

  1. slider

    Joined: Dec 1969

    +7

    Prepared?

    When Psystar started offering Mac clones it said it was prepared to defend it's right to do so.

    Either they flat out lied or they just had no concept as to what they were getting into - either way - why would you do business with a company with like this.

    I disagree with Psystar's position regarding building Mac clones period. The argument about EULA is a bigger issue - having bought the product, isn't it yours to do with as you please - but Psystar isn't really trying argue this point on principal, it's just trying to make money on someone else's work and effort. Apple did not invent the EULA it used an existing legal tool. I doubt Apple would have transitioned to Intel processors had there been no legal way to prevent their property from being used in a manner that would cut into it's own profits. We know Pystar is not making a stand on some principal b/c they've attempted 'at least' on other legal avenue to fend Apple off - the monopoly argument - and thereby demonstrating that they don't really care about the 'how' as long as they can continue to profit on someone else's work.

    Isn't this the very same kind of person (Psystar) that got us into the financial crisis we are in now? A 'loan' to himself? Sound's like a money shuffler to me - someone who's figured out how to twist the intent of the law without actually crossing the line - trying to get something for nothing.

  1. MisterMe

    Joined: Dec 1969

    +4

    chump change ...

    ... is what I see here. The debts that Psystar is unable to pay is chump change. Tell me that debtors listed are not the company's largest. Otherwise, it appears that this company was really just some teenager with a website operating out of his parents' basement. There is nothing wrong with a kid operating a business out of his parents' home. Whatever the merits of the company's products, it would appear that its real intent was to sell itself to someone with deeper pockets--Apple or a potential competitor. It would appear that the strategy backfired.

  1. MisterMe

    Joined: Dec 1969

    -5

    chump change ...

    ... is what I see here. The debts that Psystar is unable to pay is chump change. Tell me that debtors listed are not the company's largest. Otherwise, it appears that this company was really just some teenager with a website operating out of his parents' basement. There is nothing wrong with a kid operating a business out of his parents' home. Whatever the merits of the company's products, it would appear that its real intent was to sell itself to someone with deeper pockets--Apple or a potential competitor. It would appear that the strategy backfired.

  1. Johnny Niles

    Joined: Dec 1969

    -1

    Vast stupidity

    Blaming it on the economy.

    Yeah, THAT'S why you went bankrupt. Every time Psystar says anything, it just makes me dumber for having heard it.

    "It was the economy!"
    "Apple has a monopoly on their own products!"
    "We are prepared to defend ourselves!"

    Seriously, this would be funny if it weren't so completely pathetic.

  1. moldyapples

    Joined: Dec 1969

    +1

    iLife/iWork for $59.99?

    Was looking @ their web site and noticed that they will add iLife and iWork for $59.99. Since each of those retails for $79.99, how can they sell them so cheap if they're buying retail copies like they supposedly do with OSX?

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