Psystar bankruptcy dismissal sets stage for Apple suit

Posted:
in General Discussion edited January 2014
As promised, knock-off Mac creator Psystar has emerged from Chapter 11 bankruptcy, but the judge who granted the order has also taken steps to ensure the Florida company won't use the same route to fend off Apple.



The new ruling, as reported by The Mac Observer, ensures that Psystar will not be able to file for Chapter 11 bankruptcy for six months, and will not be able to file for Chapter 7 bankruptcy to avoid its lawsuit with Apple in California. Chapter 11 bankruptcy in the U.S. grants a company the ability to reorganize, while Chapter 7, also known as "straight bankruptcy," is when the business is dissolved and its assets are liquidated.



Psystar's Chapter 11 filing was dismissed in a Florida court, enabling the company to come back and sell new products, as it previously said it would. Last month, the company promised it would marry Mac OS X with Intel's Nehalem Xeon chips to yield the company's "fastest and most quiet computing configuration" yet.



The Doral, Fla.-based solutions provider also used the same e-mail to inform those following its legal proceedings with Apple that its decision to file for Chapter 11 in May was "critical" to maintaining its daily operations, but that the company now sees itself "ready to emerge" from bankruptcy and "again battle Goliath."



Translating the legal-ese of the latest twist in the ongoing Psystar saga, The Unofficial Apple Weblog summarizes the judge's ruling as follows: "Hey, Psystar! You can't use bankruptcy to weasel out of Apple's case against you."



Apple has a lawsuit against Psystar scheduled to start on January 11, 2010. When the company first filed for bankruptcy, the case was put on hold, until Apple had a stay on the case dismissed. Weeks ago, the clone-Mac-maker brought on a new legal team to continue its efforts.



Psystar was forced to file for bankruptcy protection thanks, in part, to its legal bills. The Mac Observer reports that the company owed its former legal team over $88,000.



Last week, Apple sent lawyers to Psystar's Florida headquarters for discovery in the upcoming case in 2010. Calling the event a "circus," the company's official blog invited supporters to attend and show their support.



"They will observe the building process from start to finish, including the installation of OS X on our machines," the company said of Apple's legal team. "We believe the only thing they will discover is what we have been open about from the start, and of course the scorching Florida heat."
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Comments

  • Reply 1 of 57
    hudson1hudson1 Posts: 800member
    Memo to Prystar:



    Attempts at mixing legal proceedings with humor don't work. The only thing it achieves it making you look like idiots (or worse).
  • Reply 2 of 57
    jazzgurujazzguru Posts: 6,435member
    Let the games begin...er...resume!
  • Reply 3 of 57
    Pystar will never become a viable company even if left alone. The best they will ever do is hack together some drivers that will never play consistently with the rest of the OS. They will end up like EmperorLinux, turning out crappy expensive machines that will break with every software update. Apple has nothing to worry about.
  • Reply 4 of 57
    c4rlobc4rlob Posts: 277member
    I can see Apple's legal team just drooling to really sink their teeth into this lawsuit now.
  • Reply 5 of 57
    melgrossmelgross Posts: 31,341member
    This whole thing would be a joke if it weren't such a serious issue.
  • Reply 6 of 57
    quadra 610quadra 610 Posts: 6,743member
    A comment on MDN sums it up well:



    Comment from: Shadowself



    Psystar tried to use the bankruptcy system to get a minimum of six month delay in Apple's suit against them while they continued to sell boxes. That got foiled. Now Psystar wants to drop the bankruptcy proceedings since it did not produce the effect they wanted.



    The judge involved has now stated they will not be allowed to re-file bancruptcy under any mode other than chapter 7 -- liquidation. Psystar will not be allowed to use the bankruptcy system to avoid creditors or to restructure. They can file for liquidation, but that is all. In that case the investors in Psystar are last in line to get any money back. They would be way behind Apple in any payout.



    Additionally, even if they file for liquidation under bankruptcy they will NOT be allowed a delay in Apple's suit against them. This keeps them from filing, getting a hold put on Apple's suit and then dragging out the liquidation over six months or more while they contiue to sell "clones" (i.e., "liquidate their inventory"). If they try to liquidate Apple will push for an expedited trial or judgement and there will be nothing Psystar can really do to stop it.



    Bottom line: Psystar is toast.
  • Reply 7 of 57
    dr millmossdr millmoss Posts: 5,403member
    I'm confused. The article says Psystar's Chapter 11 filing was "dismissed" by the court. Usually in legal lingo, that means it was not allowed. Unless I'm missing something, I think the correct term is "emerged" from Chapter 11.
  • Reply 8 of 57
    maximaramaximara Posts: 269member
    It looks like both the Florida and California courts are getting tired of Psystar's antics. There has been something weird as people had a devil of a time finding this company back in April 2008 and there was plenty of bizarreness there--the where is it now nonsense with the addresses, Powerpay dumping them like a hit potato, and other fun things.



    Something was bizarre about Psystar from the get go and it just get more Wonderlandish as things go on. I agree with Apple that they are likely a stalking horse and somebody is bankrolling them.
  • Reply 9 of 57
    dr millmossdr millmoss Posts: 5,403member
    Quote:
    Originally Posted by Maximara View Post


    I agree with Apple that they are likely a stalking horse and somebody is bankrolling them.



    I don't think Apple has ever said such a thing. The source of this idea has been third party speculation.
  • Reply 10 of 57
    jeffdmjeffdm Posts: 12,946member
    Quote:
    Originally Posted by Maximara View Post


    Something was bizarre about Psystar from the get go and it just get more Wonderlandish as things go on. I agree with Apple that they are likely a stalking horse and somebody is bankrolling them.



    If someone is bankrolling Psystar, then why do they still owe their previous legal team a good chunk of money? If they really had big investors like some Mac fans alleged, then $88k wouldn't be that big of a deal. I'm not convinced that this operation is any more than a few buddies that didn't know what they were getting into.
  • Reply 11 of 57
    Quote:
    Originally Posted by Dr Millmoss View Post


    I don't think Apple has ever said such a thing. The source of this idea has been third party speculation.



    At one point Apple amended it's own suit against Psystar to include a search for additional party(-ies) that may be behind a more concerted effort to hurt Apple. It might be buried by now, but hopefully you can find it in an earlier story.
  • Reply 12 of 57
    quadra 610quadra 610 Posts: 6,743member
    Quote:
    Originally Posted by JeffDM View Post


    If someone is bankrolling Psystar, then why do they still owe their previous legal team a good chunk of money? If they really had big investors like some Mac fans alleged, then $88k wouldn't be that big of a deal. I'm not convinced that this operation is any more than a few buddies that didn't know what they were getting into.



    Good point.



    It's pretty clear that Psystar couldn't afford to pay its previous legal team, and the current one is probably hoping for some sort of ridiculous windfall in order to get some kind of remuneration.
  • Reply 13 of 57
    melgrossmelgross Posts: 31,341member
    Quote:
    Originally Posted by Dr Millmoss View Post


    I'm confused. The article says Psystar's Chapter 11 filing was "dismissed" by the court. Usually in legal lingo, that means it was not allowed. Unless I'm missing something, I think the correct term is "emerged" from Chapter 11.





    I'm not sure how that would work. Usually when a company "emerges" from bankruptcy it's because they have come to terms with their creditors. It's not clear that this happened. Actually, it seems that it hasn't happened.



    so it's possible that the judge decided that the bankruptcy wasn't proper in the first place, and dismissed it. If a company can be shown that their only reason to declare bankruptcy is to avoid lawsuits, then it usually isn't granted. It's possible the court may thing that it was granted under false pretenses, and I believe that indeed, that's the situation here.
  • Reply 14 of 57
    melgrossmelgross Posts: 31,341member
    Quote:
    Originally Posted by Dr Millmoss View Post


    I don't think Apple has ever said such a thing. The source of this idea has been third party speculation.



    It is true. In their lawsuit, Apple said that their are other entities that are behind the company, and that Apple had information to that effect, and wanted to find more from Psystars books. It was considered to be one reason why Psystar unbelievably said that they hadn't any financial information.
  • Reply 15 of 57
    SpamSandwichSpamSandwich Posts: 30,581member
    It would be interesting to be a fly on the wall when Apple unearthed evidence of whoever they thought was behind Psystar. Really makes one wonder if this a single company or a corporate conspiracy. It should be noted that an LLC structure legally protects the identities of all companies or individuals who may be shareholders in the company.
  • Reply 16 of 57
    oc4theooc4theo Posts: 294member
    I can't wait to see these bastards shut down. Why is everybody stealing and profiting from Apple? From Microsoft to Palm and everyone and their mothers? Is there no more talent left in America? It is very shameful to see these no-good companies trying to reap off many years of R & D, hundreds of millions of dollars of cost and development.



    America has become a deadpan of ignorance. This is what happens when a country spends its resources in war instead of education. Very sad indeed!
  • Reply 17 of 57
    SpamSandwichSpamSandwich Posts: 30,581member
    Quote:
    Originally Posted by OC4Theo View Post


    I can't wait to see these bastards shut down. Why is everybody stealing and profiting from Apple? From Microsoft to Palm and everyone and their mothers? Is there no more talent left in America? It is very shameful to see these no-good companies trying to reap off many years of R & D, hundreds of millions of dollars of cost and development.



    America has become a deadpan of ignorance. This is what happens when a country spends its resources in war instead of education. Very sad indeed!



    What in the world is a 'deadpan of ignorance'? I like the sound of it, but it certainly doesn't mean what you think it means.
  • Reply 18 of 57
    dr millmossdr millmoss Posts: 5,403member
    Quote:
    Originally Posted by melgross View Post


    I'm not sure how that would work. Usually when a company "emerges" from bankruptcy it's because they have come to terms with their creditors. It's not clear that this happened. Actually, it seems that it hasn't happened.



    so it's possible that the judge decided that the bankruptcy wasn't proper in the first place, and dismissed it. If a company can be shown that their only reason to declare bankruptcy is to avoid lawsuits, then it usually isn't granted. It's possible the court may thing that it was granted under false pretenses, and I believe that indeed, that's the situation here.



    The court reorganizes their debts such that they can pay them off. The source article doesn't shed any light on this situation, as it suggest that Psystar asked the court to dismiss their Chapter 11 filing. So it's not clear whether their debts were reorganized, or something else happened. Either way, it appears that Apple now has a clear shot at them.



    Quote:
    Originally Posted by melgross View Post


    It is true. In their lawsuit, Apple said that their are other entities that are behind the company, and that Apple had information to that effect, and wanted to find more from Psystars books. It was considered to be one reason why Psystar unbelievably said that they hadn't any financial information.



    From the discussion at the time, I recall only that Apple had named "John Does" in the lawsuit, which some assumed must be an implication that Apple was looking for ghosts in the works, even though it's standard procedure to do this. What I am not recalling is anyone from Apple or their legal briefs stating the belief that Psystar is a front. That's what I remember anyway.



    EDIT: A story from late 2008:



    http://news.cnet.com/8301-13579_3-10112307-37.html
  • Reply 19 of 57
    jeffdmjeffdm Posts: 12,946member
    Quote:
    Originally Posted by SpamSandwich View Post


    What in the world is a 'deadpan of ignorance'? I like the sound of it, but it certainly doesn't mean what you think it means.



    Would it mean something like playing dumb? It looks like it might be mixing metaphors, but I don't know what the original metaphors are.
  • Reply 20 of 57
    bartfatbartfat Posts: 432member
    Quote:
    Originally Posted by melgross View Post


    This whole thing would be a joke if it weren't such a serious issue.



    This IS starting to sound like a bad joke, just like SCO. Just... die... already.
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