May 26th, 2009
Psystar files for Chapter 11 (download petition); Blames economy, suppliers not Apple legal spat
Updated: Psystar, the unauthorized Mac clone maker, battling Apple in a California courtroom has filed for Chapter 11.
The news, reported first by the Mac Observer from what I can tell, isn’t that surprising. Psystar was under financial strain from trying to battle Apple in court while maintaining a business. As Mac Observer noted, the Psystar bankruptcy may indicate that its legal backers may have dropped out. However, Psystar blames the economy and suppliers’ increasingly difficult credit terms for its problems. In any case, 9 to 5 Mac reckons that the Northern California courtroom battle between Psystar and Apple is mired in limbo.
Psystar workers confirmed the bankruptcy and the filing appears to be made last Thursday.
In a petition (download petition PDF and declaration), Psystar claimed 1-49 creditors with assets of $0 to $50,000. Liabilities were $100,001 to $500,000.
Meanwhile, Psystar owes Carr & Farrell, the lawyers for Apple vs. Psystar suit, more than $88,000, DHL almost $13,000 and the IRS nearly $12,000. The fact that Psystar couldn’t pay its credit card processors or its shippers casts some doubts on plans to launch new Mac clones and even a netbook. The bankruptcy news comes following a small but significant victory over Apple in the courtroom.
In one of a bevy of filings (see PDF), Psystar blamed the economy for its financial woes:
Due to the weakened economy, Debtor has had no alternative but to commence these Chapter 11 proceedings. Debtor sales have been greatly affected by the decrease in consumer spending. The financial crisis has also caused creditors to tighten up their terms and become more demanding for immediate payment. Debtor’s vendors due to their own financial problems are not being able to supply all necessary items to allow Debtor to produce their product, thus, forcing Debtor to pay higher prices for parts in order to fulfill customer orders in a timely manner and to assure satisfaction with the product. These factors seriously contribute to the Debtor not being able to turn a significant profit in each sale. Debtor has continued doing business in this manner with diminutive profit in hopes of a turn around in our present economy but find that the long term roots of this crisis can only be overcome by directly implementing the restructuring of Debtor s business plan and can only do so with the requested Chapter 11 protection. Debtor plans on emerging from this Chapter 11 with a strong and effective plan to make an increasingly higher profit and still provide the consumer with the product that they have grown to enjoy and trust. Debtor possesses valuable intellectual property which will be implemented in a well thought out and more profitable business plan.
Here’s the list of the top 20 creditors:
Meanwhile, there’s a hearing that was scheduled for today to keep Psystar’s bank accounts. Psystar doesn’t want to close its bank accounts and open new ones due to the administrative burden (see filing). Typically, bank accounts are closed when a company files for bankruptcy and new ones are opened. That move closes the books on the past company and the reorganizing one. Psystar maintains that if it can’t continue with its existing accounts it won’t be able to continue operations.
Calls are out to Psystar’s lawyer and I’ll update as I find out more.
Larry Dignan is Editor in Chief of ZDNet and Smart Planet as well as Editorial Director of ZDNet sister site TechRepublic. See his full profile and disclosure of his industry affiliations.
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| 05/26/09
