The Shadowrun Situation

[TheFlatline]

Short read. Worth looking into.

So IMR's basic defense is:

1. The Former Operations manager ran off with all the pertinent paperwork. It appears that no effort has been made to retrieve it. Well, they can subpoena those records now I suspect. That they haven't gone after David Stansel is interesting, because being an LLC, the company is owned as a partnership, and what Stansel did is very much stealing if their allegations are correct.

They also state that not knowing how much money they actually owed, they offered to pay Sugarbroad everything he was asking, and in exchange sign a "standard employment form". The document suggests the refusal to sign and accept the money was malicious and probably related to retaining his copyright. Having been in a union family and privy to a lot of labor disputes, it's far more likely (although pure speculation) that Sugarbroad asked for interest on late payment, and IMR told him to pound sand. Unless Sugarbroad actually has copies of his paperwork (I hope he does for his sake), it kind of boils down to a dispute over a verbal agreement.

2. David Stansel's father, Paul, is an investor in IMR, and signed a contract that gave IMR a 20k credit line with absolutely no due date on it and mandates interest-only payments (which sounds like a stupid f*cking idea to me) in perpetuity. They're claiming that they made a payment plan of 1000 dollars a month roughly towards the 20k principle and any interest accumulating, and that they're adhering to this plan.

There's not enough information here to really comment, other than the father should have put some boilerplate into the agreement to protect his ass on the back end. It *sounds* like the original investment was to be interest-only payments as long as the father wanted to invest ("the investment was held"), and that he's wanting to divest from IMR now.

Oh, that and apparently, IMR doesn't have 20k in capital to pay off their debts and just be done with Paul Stansel, nor are the owners either willing or able to pay off said debt.

Which might be the biggest realization of the entire filing.

3. Wildfire LLC was not only paid all royalties, but it was in fact overpaid. This should be easy to verify. Unless, of course, there are cooked books showing an altered amount of product sold, and thus royalties owed. But that's what the two separate audits are going to establish.


What IMR is asking for:

1. Dismissal of the case.

2. Reimbursement for legal and attorney fees.

3. "proximate cause" damages, and possible punitive damages, against the petitioners. Now this is interesting, because "proximate cause" is required to establish injury: ie running a red light is the "proximate cause" of a car crash. This begs the question, "What injury has IMR suffered due to this petition?". That isn't answered in this reply. Is it their good reputation being sullied? Are they going to argue that this is going to put them out of business? Who knows? It can't be a direct loss of revenue in regards to Wildfire, because IMR doesn't dispute that Wildfire severed it's contract with IMR.

4. The ability to press for more damages if the case is dismissed, even if damages are awarded here.

5. Anything else the court wishes to grant IMR.

To be fair, I know from owning a company and being in a couple lawsuits that at least in California, all these points are standard. The only wildcard is in point 3, where IMR has to demonstrate what injury it has sustained, and only has to do that if the petition is dismissed if memory serves.

Other interesting tidbits:

It flat out denies, in a court record, that Catalyst is late in paying it's debts. This is funny, because I have a post from Shadowrun4.com stating that they were behind on paying freelancers.

They state that the petitioners can only press for involuntary bankruptcy if the debt in question is not disputed, and they are claiming a dispute in all three situations, especially with Wildfire. It will be interesting to see in evidence if this is the case, or if it's disputing merely as a delaying tactic.

Now that it's filed, it'll probably take a year, year & a half to resolve. It might not though. I don't know how fast Washington's bankruptcy court is. California's legal system generally suffers a lack of alacrity though. The main point is, if IMR gets the Shadowrun license back, it won't be much of an issue, because they can pay off their debts (eventually, in theory), and if they don't, they'll fold, and it won't be much of an issue for the debtors, because an LLC separates the company from the owners, and we've already established that there will be no legal proceedings over the "co-mingling" of all that money.

[Crissa]

Washington is usually strangely quick.

At least, that was my experience.

-Crissa

[Username17]

Also: "comingling funds" is a great way to convince the court to invoke the Alter Ego theory and pierce th asset divide between owner and LLC. The fact that members of the company have straight admitted to comingling means that the court is well within its rights to announce that Loren Coleman's assets are actually company assets for purposes of paying off debts.

Because it's essentially public record that he used company money to pay personal expenses.

-Username17

[Gelare]

I'm still amazed that there aren't more people gunning for Loren Coleman himself. I mean, he's got a perfectly good, brand new house to take as judgment, and all the corporate structures and veils in the world can't protect you from direct tort liability (like fraud or negligence) (unless it's to fellow employees).

[TheFlatline]

I'm still amazed that there aren't more people gunning for Loren Coleman himself. I mean, he's got a perfectly good, brand new house to take as judgment, and all the corporate structures and veils in the world can't protect you from direct tort liability (like fraud or negligence) (unless it's to fellow employees).

First you have to stick IMR with legal debt. If it then turns out they don't have two dimes to rub together and they *should*, then you can go after Coleman and try to establish what Frank wrote above.

Otherwise, it was up to the other people in Catalyst to blow the whistle on him and start proceedings. They have stated that they refuse to do that.

[Username17]

More legal wrangling!

From the Creditors:

[*]Motion For Entry Of Order For Relief In Involuntary Proceeding (requested on Shortened Time)
[*]Declaration of Diana K. Carey in Support of Motion for Entry of Order for Relief in Involuntary Proceeding
[*]Motion to Shorten Time to hear the Motion For Entry Of Order For Relief In Involuntary Proceeding (Requested hearing set for Friday, May 21, 2010 @9:30 a.m.)
[*]Ex Parte Received UNSIGNED Order

From IMR:

[*]Objection
[*]Declaration
[*]Another UNSIGNED Order

First of all, the Unsigned Orders don't really mean anything. That is just lawyer speak for asking judges to do things. They submit things to the judge that are orders from the judge they are sending it to that would take effect if and when the judge signed it. Which is the kind of thing that would really piss me off if someone did that to me, but apparently judges are cool with it. I guess you see things differently when you have to read all this crap and type up all the legal briefings and shit. Someone doing all the work of getting the hereby ordered in the right place is simply a relief.

Anyway, the Judge agreed that IMR filed their response late. And the creditors are asking to have the hearing moved up to May 21st. If they can't, the next free day is June 18th. IMR has a new lawyer and wants to have the proceedings delayed until the 18th of June and also immediately dismissed.

-Username17

[BeeRockxs]

Where do you take it from that the judge agrees that IMR filed late?

[Taharqa]

Yeah, I don't see anything indicating agreement one way or the other by the judge in the document above.

IANAL, but from following the comments of those that are on various threads, it seems that the actual deadline is 21 days + 3 days for delivery + 1 day if the final day falls on a weekend. That would put the deadline last Monday, meaning CGL's response is not late.

[Username17]

I don't follow the arguments that involve the 17th of May counting as being 21 days after the 21st of April. But whatever the case, the judge decided to schedule the hearing for the 21st of May, as requested by the creditors.

-Username17

[TheFlatline]

Washington is usually strangely quick.

At least, that was my experience.

-Crissa

Holy sh*t you aren't kidding. Well I guess it goes down this Friday, neh?

That's what, less than 30 days after the petition was actually *served*?

[Taharqa]

I don't follow the arguments that involve the 17th of May counting as being 21 days after the 21st of April. But whatever the case, the judge decided to schedule the hearing for the 21st of May, as requested by the creditors.

-Username17

Here is the link from a post by a lawyer, although one who is not a lawyer in WA, admittedly.

http://forums.dumpshock.com/index.php
s=&showtopic=30898&view=findpost&p=931591

Its not clear from that document whether the hearing is being scheduled for reasons of lateness or not.

EDIT: damn, the link is not working for some reason. Try scrolling to post #629 here

http://forums.dumpshock.com/index.php?s ... 898&st=625

[Username17]

Yeah, I don't follow that at all.

But whatever the reasoning, IMR's request for summary dismissal was denied and the creditor's request for expediting the hearing granted. So whether IMR's response "counted" or not, they didn't get anything they asked for. So it's a moot point.

-Username17

[Username17]

Also, apparently people who want to join the lawsuit can do so, but they have to get the paperwork in by 9 AM on Friday if the lawsuit continues to plow ahead with the speed it has been going with.

And yes, Paul Stansel, WildFire LLC, and Sugarboard do have copies of the relevant paperwork and are willing to share. This being the modern age with like internets and fax machines and stuff, people could seriously get copies from them and still get them in before the hearing.

-Username17

[Endovior]

lolrus. IMR's lawyer has already stated for the record that he can't be there. That'll be... entertaining.

[TheFlatline]

Jennifer Harding posted the following yesterday at dumpshock in reference to IMR's statement that no paperwork could be found regarding Sugarbroad:

When I left on March 30th, there were physical copies of all Sugarbroad's invoices in a filing cabinet and electronic copies of them in the accounting software that was provided to the Controller and CPA and the owners. There had also been numerous discussions over the satisfactory work performed as well as discussing the fastest way to pay so as to have more work done, with all the directors aware of the exact amount due (I remember one director meeting where the amount was written on a flip chart and all the directors were present and discussing it; that poster sized paper was left up for about a month at all the weekly meetings). Also, lots of people did work that was on an invoice basis - computer programming, editing, indexing, layout, etc.

What happened between March 30th and now... *shrug*

Sounds to me like paperwork/evidence got "lost in the shuffle" when they changed lawyers.

[TheFlatline]

lolrus. IMR's lawyer has already stated for the record that he can't be there. That'll be... entertaining.

He'll be there. I suspect he bluffed with that and his bluff was called.

I won't flat out accuse the lawyer of BSing the court, but I've known many lawyers who make their own schedule as convenient to their clients as they can.

To put it another way, I've retained lawyers for my business who have been "unbelievably busy" and out of touch until I was ready to deal with whatever legal issue was going on. In fact, one lawyer flat out said this was one of his primary services to me: to be the only point of contact, and I controlled his availability.

[Centurion13]

I cannot seem to get a PM to Frank, so I will say my piece here:

Frank, I want to thank you for taking the time to expose this nest of snakes and for keeping the fan base briefed as to what is going on.

I don't always agree with the opinions you freely mix in with the info, but the info is priceless and so, you're kinda like my Dad. Except, not so old.

Thank you for representing the ones who cannot themselves come forward. Thank you for wanting justice bad enough to pursue this.

Regards,

Steve Satak

[Crissa]

Holy sh*t you aren't kidding. Well I guess it goes down this Friday, neh?

Yeah, you probably wouldn't believe what a downer dealing with legal realities in California was after that.

-Crissa

[kzt]

Yeah, I don't follow that at all.
But whatever the reasoning, IMR's request for summary dismissal was denied and the creditor's request for expediting the hearing granted. So whether IMR's response "counted" or not, they didn't get anything they asked for. So it's a moot point.

Apparently the judge agreed the certified mail doesn't get the 3 day extension, I guess that is only for 1st class mail.

[shau]

More legal wrangling!


First of all, the Unsigned Orders don't really mean anything. That is just lawyer speak for asking judges to do things. They submit things to the judge that are orders from the judge they are sending it to that would take effect if and when the judge signed it. Which is the kind of thing that would really piss me off if someone did that to me, but apparently judges are cool with it. I guess you see things differently when you have to read all this crap and type up all the legal briefings and shit. Someone doing all the work of getting the hereby ordered in the right place is simply a relief.

I have not been following this too deeply because I kinda do this shit at all day at work, but I thought I would comment here. It's customary to include an order whenever you move the court to do anything. By sending an unsigned order to the court you are simply saving them the time needed to type one out. It's not considered presumptuous to include an order with a motion and the court in no way feels like your ordering them to rule in your favor when you file an unsigned order.

[Crissa]

To put it in more layman's terms:

Generally, an order is 'what you want the court to do'. The court won't ever do what you want without writing up and submitting the order.

So, if you wanted to petition the court to do something, the thing you do is write up an order of the court doing exactly that, and put it before the judge. The judge reads it and either agrees or disagrees with the order, and if you're lucky, the judge even tells you all the things they disagree with.

-Crissa

[Panzerfaust 150]

Hey all, thought I would delurk and comment:

1. I read through the legal documents? Was the overpayment to Wildfire a deliberate legal strategy to get them to drop their end of the lawsuit and cause a split amongst those trying to collect? Or, is this just a sign IMR's books are basically in chaos?

2. If this doesn't go IMR's way, can they a)appeal? and b)what usually happens in cases like this? Immediate liquidation? Or some sort of receivership where the court does this in an orderly manner?

3. A comment, I tried to IM this to Frank, but yeah, I used to be on Fanpro's demo teams. I worked with some great guys on the teams...but some of the folks I met on the writing end...and Centurion13's heard me say it...they acted like made men in "Goodfellas".

[Wesley Street]

they acted like made men in "Goodfellas"

Nerd-thugs?

[Panzerfaust 150]

they acted like made men in "Goodfellas"

Nerd-thugs?

Not so much that..but the kind of "We're untouchable, this is our pond, and if you want to break into the writing game...then we have to teach you the secret handshake...otherwise, fugitaboutit."

[Gelare]

2. If this doesn't go IMR's way, can they a)appeal? and b)what usually happens in cases like this? Immediate liquidation? Or some sort of receivership where the court does this in an orderly manner?

The entire point of bankruptcy is that the court takes your assets and gives them to creditors in an orderly way, as opposed to the alternative, which is everyone suing you as fast as they can and rushing to levy on whatever property you have left.

Does anyone know if any real person is acting as surety for any of IMR's loans or debts? I know that's standard for a lot of small businesses, but I don't know how small counts as small.