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