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Psystar Files for Bankruptcy, Ch. 11 - Updated 3Xs
Tuesday, May 26 2009 @ 01:48 PM EDT

Psystar filed [PDF] for Chapter 11 bankruptcy protection on May 21 in the United States Bankruptcy Court for the Southern District of Florida. There was a hearing at 11 AM this morning regarding some emergency motions, like the amended motion [PDF] for permission to keep using business forms, that kind of thing. I have the filings for you.

It will not surprise you that there were deficiencies in the filings, and the court has given them until June 5 to file correctly. Psystar has begun to fill in the blanks already. Friendly tip: the amended motion to continue using business forms lists the date of the bankruptcy as 2008, so more corrections are likely. The initial filing [PDF] lists 1-49 as the number of creditors, $0-$50,000 as their assets, and $100,000 to $500,000 as their estimated liabilities. They don't expect unsecured creditors to get a thing. They also checked the box that states that they are not "a small business debtor as defined in 11 U.S.C. Section 101(51D)."

The creditors listed as owed the most, the top 20 creditors, are their attorney, Carr & Ferrell, listed as owed $88,468.84, and may that be a lesson to them, the IRS, around $12,000, JAMS ADR, some more debt paid for by credit card, I gather (NCO Financial Systems, OCZ, TIMBAR), and -- heh heh -- $120,000 to Rodolfo Pedraza, President of Psystar, an "Officer loan", and finally folks like UPS, FED EX, and DHL.

I've seen a couple of articles claiming that at the hearing we'll find out who the investors were who were backing this adventure. However the same articles are saying that the investors have backed away, so both can't be so. If they have pulled out, Psystar will not have to list them in their filings, I don't think. That may be the point.I think this means we may never know.

Chapter 11 means they are asking the court to let it stay in business, a business that Apple alleges is violating its rights. Asking a court to let you infringe another company's rights is not likely to be a winning strategy in the long run, but as we've seen in the SCO saga, it certainly can prolong the death spiral. I'm sure Apple will have something to say to the court about using bankruptcy protection to continue to infringe its asserted rights, however. How long it takes to work through all that -- well, we'll have to wait and see. In the meantime, I presume this tolls the deposition of a Psystar executive knowledgeable about Psystar's business, which the California court just ordered Psystar to endure on June 3 in Apple's law firm, Townsend & Townsend's, offices in San Francisco.

The list of unsecured creditors [PDF] adds Google and Heartland Payments Systems (no amounts owed them are listed, which indicates they don't know the figure yet but will supply it later) to the list on the initial filing.

The docket so far:

Psystar Corporation
Case type: bk
Chapter: 11
Asset: Yes
Vol: v
Judge: Robert A Mark


Date filed: 05/21/2009
Date of last filing: 05/24/2009

1 - Filed & Entered: 05/21/2009 - Voluntary Petition (Chapter 11)
Chapter 11 Voluntary Petition. [Fee Amount $1039] (Lopez, Lazaro)

2 - Filed & Entered: 05/21/2009 - Declaration Re: Electronic Filing
Declaration Under Penalty of Perjury to Accompany Petitions, Schedules and Statements Filed Electronically by Attorney Lazaro J. Lopez Esq. (Re: [1] Voluntary Petition (Chapter 11) filed by Debtor Psystar Corporation). (Lopez, Lazaro)

3 - Filed & Entered: 05/21/2009 - Motion for Maintenance of Existing Bank Accounts
Motion for Maintenance of Existing Bank Accounts - Filed by Debtor Psystar Corporation. (Lopez, Lazaro)

4 - Filed & Entered: 05/21/2009 - Motion to Assume/Reject
Motion to Assume Executory Contract - Filed by Debtor Psystar Corporation. (Lopez, Lazaro)

5 - Filed & Entered: 05/21/2009 - Miscellaneous Motion
Emergency Motion Authorizing Debtor to Honor Customer Deposits - Filed by Debtor Psystar Corporation. (Lopez, Lazaro)

6 - Filed & Entered: - 05/21/2009 - Terminated: 05/22/2009 - Miscellaneous Motion
Emergency Motion For Order Authorizing Debtor to Continue Using Business Forms Filed by Debtor Psystar Corporation. (Lopez, Lazaro)

7 - Filed & Entered: 05/21/2009 - Corporate Ownership Statement
Corporate Ownership Statement Filed by Debtor Psystar Corporation. (Lopez, Lazaro)

8 - Filed: 05/21/2009 Entered: 05/22/2009 - Notice of Deficiency Re: Schedules
Notice of Deficiency. List of Equity Security Holders due 6/5/2009. Summary of Schedules due 6/5/2009. Schedule A due 6/5/2009. Schedule B due 6/5/2009. Schedule D due 6/5/2009. Schedule E due 6/5/2009. Schedule F due 6/5/2009. Schedule G due 6/5/2009. Schedule H due 6/5/2009.Statement of Financial Affairs Due 6/5/2009.Declaration Concerning Debtors Schedules Due: 6/5/2009. [Incomplete Filings due by 6/5/2009]. (Covington, Katrinka)

-- Filed & Entered: 05/22/2009 - Automatic docket of credit card
Receipt of Voluntary Petition (Chapter 11)(09-19921) [misc,volp11a] (1039.00) Filing Fee. Receipt number 5558592. Fee amount 1039.00. (U.S. Treasury)

9 - Filed & Entered: 05/22/2009 - Notice to Filer of Apparent Filing Deficiency
Notice to Filer of Apparent Filing Deficiency: Incomplete PDF Image Attached to the Docket Entry. THE FILER IS DIRECTED TO FILE A CORRECTED **MOTION** WITHIN TWO BUSINESS DAYS. (Re: [6] Emergency Motion For Order Authorizing Debtor to Continue Using Business Forms Filed by Debtor Psystar Corporation). (Covington, Katrinka)

10 - Filed & Entered: 05/22/2009 - Notice of Hearing
Notice of Hearing (Re: [3] Motion for Maintenance of Existing Bank Accounts Filed by Debtor Psystar Corporation. [4] Motion to Assume Executory Contract Filed by Debtor Psystar Corporation. [5] Emergency Motion Authorizing Debtor to Honor Customer Deposits Filed by Debtor Psystar Corporation.) Hearing scheduled for 05/26/2009 at 11:00:00 AM at 51 SW First Ave Room 1406, Miami. (Antillon, Jackie)

11 - Filed & Entered: 05/22/2009 - Balance of Schedules and Statements Filed
Schedules Filed: [F] Filed by Debtor Psystar Corporation. (Lopez, Lazaro)

12 - Filed & Entered: 05/22/2009 - Declaration Re: Electronic Filing
Declaration Under Penalty of Perjury to Accompany Petitions, Schedules and Statements Filed Electronically by Attorney Lazaro J. Lopez Esq. (Re: [11] Balance of Schedules and Statements Filed filed by Debtor Psystar Corporation). (Lopez, Lazaro)

13 - Filed & Entered: 05/22/2009 - Amended Motion
Amended Motion ([6] Emergency Motion For Order Authorizing Debtor to Continue Using Business Forms) Filed by Debtor Psystar Corporation. (Lopez, Lazaro)

14 - Filed & Entered: 05/22/2009 - Certificate of Service
Certificate of Service Filed by Debtor Psystar Corporation (Re: [3] Motion for Maintenance of Existing Bank Accounts filed by Debtor Psystar Corporation, [4] Motion to Assume Executory Contract filed by Debtor Psystar Corporation, [5] Emergency Motion Authorizing Debtor to Honor Customer Deposits filed by Debtor Psystar Corporation. [10] Notice of Hearing ). (Lopez, Lazaro) **Modified on 5/26/2009 to Add Omitted Linkage to DE #10** (Cohen, Diana).

15 - Filed: Entered: 05/25/2009 - BNC Certificate of Mailing
BNC Certificate of Mailing (Re: [8] Notice of Deficiency. List of Equity Security Holders due 6/5/2009. Summary of Schedules due 6/5/2009. Schedule A due 6/5/2009. Schedule B due 6/5/2009. Schedule D due 6/5/2009. Schedule E due 6/5/2009. Schedule F due 6/5/2009. Schedule G due 6/5/2009. Schedule H due 6/5/2009.Statement of Financial Affairs Due 6/5/2009.Declaration Concerning Debtors Schedules Due: 6/5/2009. [Incomplete Filings due by 6/5/2009].) Service Date 05/24/2009. (Admin.)

Update: Here's a late addition to the Psystar BK docket:
05/26/2009 - 16 - Notice of Meeting of Creditors.
Meeting of Creditors to be Held on 6/24/2009 at 02:30 PM at 51 SW First Ave Room 1021, Miami. Deadline to File a Complaint to Determine Dischargeability of Certain Debts is 8/24/2009. Proofs of Claim due by 9/22/2009. (Covington, Katrinka) (Entered: 05/26/2009)
Update 2: A bit more. Berger Singerman appearing for Apple. Wow.

05/27/2009 - 17 - Notice of Appearance and Request for Service of Pleadings and Other Papers by Paul Steven Singerman Esq Filed by Creditor Apple, Inc.. (Singerman, Paul) (Entered: 05/27/2009)

05/27/2009 - 18 - Transcript of 5/26/2009 Hearing [Document Image Available ONLY to Court Users]. Redaction Request Due By 06/3/2009. Statement of Personal Data Identifier Redaction Request Due by 06/17/2009. Redacted Transcript Due by 06/29/2009. Transcript access will be restricted through 08/25/2009. (Ouellette and Mauldin) (Entered: 05/27/2009)

And Beta News has a report on the filings and the hearing, including this bit:
Psystar's profits were "diminutive" during the bad economy, it goes on, with the hopes of a turnaround on the horizon. That hasn't happened, and while the company now seeks time and space to make a fresh start of things, its plan so far is to build again around its "valuable intellectual property" -- no doubt a reference to its ability to produce Mac work-alikes.
... which made me smile.

Update 3: Psystar has filed its notice of bankruptcy with the California court, titled Defendant and Counterclaimant Psystar Corporation's Suggestion of Bankruptcy [pdf]. It says this, in part:

PLEASE TAKE FURTHER NOTICE that pursuant to section 362(a) of the Bankruptcy Code, the Debtor's filing of its voluntary petition operates as a stay, applicable to all entities, of, among other things: (a) the commencement or continuation of all judicial, administrative, or other actions or proceedings against the Debtor (i) that were or could have been commenced before the commencement of the Debtor's cases; (b) the enforcement, against the Debtor or against any property of the Debtor's bankruptcy estates, of a judgment obtained before the commencement of the Debtor's cases; of (c) any act to obtain possession of property of or from the Debtor's bankruptcy estate, or to exercise control over property of the Debtor's bankruptcy estate.
Unlike in the SCO v. Novell case, here there is no judgment yet, other than the discovery order, so I gather Psystar intends to try to resolve this in bankruptcy court, where Apple would get what? Probably nothing it can collect, I'm guessing, because they are an unsecured creditor.

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