Former Stargate Dev's Shareholders Warp to Court
Even though Cheyenne Mountain Entertainment is bankrupt and no longer working on Stargate Worlds, its shareholders are suing to retrieve the company's assets.
Back in March, it looked as though the the drama surrounding Stargate Worlds and its much-troubled developer Cheyenne Mountain Entertainment (CME) had <a href=http://www.escapistmagazine.com/news/view/99506-Stargate-Worlds-Studio-Ceases-Operations>finally come to a close. This was apparently the wrong thing to assume, though, since the defunct developer's shareholders are claiming that the company's assets were fraudulently transferred for a fraction of their actual value. As a result, these investors are filing a lawsuit against multiple parties and seeking $10 million in damages, alleging breach of contract, civil conspiracy, fraudulent transfer, tortious interference, and unjust enrichment.
The suit lists companies and people as its defendants: Dark Comet Games, Fresh Start Studios, Harlan James Brown II, Karl Hiatt and his wife (first name unknown), Chris Lombardo, and Mark Renberg. While that may seem like a lot of folks to sue, it may not be totally unreasonable if the plaintiffs' story is to be believed.
According to the court documents, CME's bankruptcy in February meant that it, "could not dispose of any of the assets in the debtor's estate without approval of the bankruptcy court." However, Fresh Start Studios apparently tried to seize all of CME's assets from its offices, an action that was prevented because (again, according to the lawsuit) the police were called. Things only get weirder and more complicated from here.
CME's former president, Timothy Jenson, began negotiations to transfer the company's assets to Fresh Start's control even though no "approval was sought or obtained from the bankruptcy court permitting CME to dispose of ... all of the assets of CME's subsidiaries." As a result, Fresh Start only paid $100,000 for these assets, which is less than one percent of the "tens of millions of dollars" the complaint claims CME was able to raise for Stargate World' development.
As a result, the receiver dealing with CME's bankruptcy met with three plaintiff shareholders and explained that the company now "lacked any reasonable means or prospect of internally generating revenues."
Despite the fact that this sale took place, its validity is more than a little dubious thanks to the lack of approval from shareholders, the board of CME, and the lack of a signature by the president of CME (to name only a few of the stumbling blocks listed by plaintiffs).
The lawsuit claims the receiver noted, "that the transfer of the Cheyenne entities' assets ... was improper," and supposedly notified Fresh Start that it would have to voluntarily return the assets or face legal action. However, the receiver refused to do much more on behalf of the shareholders and asked to be dismissed from the proceedings, "after plaintiffs refused to pay him $2 million to take legal action against Fresh Start." From this point, it seems, the shareholders took matters into their own hands and decided to go after everyone who had apparently wronged them.
Reading through the 39-page document, it's obvious this case is a Gordian Knot that's going to require a lot of work to untangle before the truth manages to get exposed. One thing's for certain, though: The shareholders of CME aren't likely to see any of their lost investments in the near future.
Source: <a href=http://www.courthousenews.com/2010/08/26/29886.htm>Courthouse News
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Back in March, it looked as though the the drama surrounding Stargate Worlds and its much-troubled developer Cheyenne Mountain Entertainment (CME) had <a href=http://www.escapistmagazine.com/news/view/99506-Stargate-Worlds-Studio-Ceases-Operations>finally come to a close. This was apparently the wrong thing to assume, though, since the defunct developer's shareholders are claiming that the company's assets were fraudulently transferred for a fraction of their actual value. As a result, these investors are filing a lawsuit against multiple parties and seeking $10 million in damages, alleging breach of contract, civil conspiracy, fraudulent transfer, tortious interference, and unjust enrichment.
The suit lists companies and people as its defendants: Dark Comet Games, Fresh Start Studios, Harlan James Brown II, Karl Hiatt and his wife (first name unknown), Chris Lombardo, and Mark Renberg. While that may seem like a lot of folks to sue, it may not be totally unreasonable if the plaintiffs' story is to be believed.
According to the court documents, CME's bankruptcy in February meant that it, "could not dispose of any of the assets in the debtor's estate without approval of the bankruptcy court." However, Fresh Start Studios apparently tried to seize all of CME's assets from its offices, an action that was prevented because (again, according to the lawsuit) the police were called. Things only get weirder and more complicated from here.
CME's former president, Timothy Jenson, began negotiations to transfer the company's assets to Fresh Start's control even though no "approval was sought or obtained from the bankruptcy court permitting CME to dispose of ... all of the assets of CME's subsidiaries." As a result, Fresh Start only paid $100,000 for these assets, which is less than one percent of the "tens of millions of dollars" the complaint claims CME was able to raise for Stargate World' development.
As a result, the receiver dealing with CME's bankruptcy met with three plaintiff shareholders and explained that the company now "lacked any reasonable means or prospect of internally generating revenues."
Despite the fact that this sale took place, its validity is more than a little dubious thanks to the lack of approval from shareholders, the board of CME, and the lack of a signature by the president of CME (to name only a few of the stumbling blocks listed by plaintiffs).
The lawsuit claims the receiver noted, "that the transfer of the Cheyenne entities' assets ... was improper," and supposedly notified Fresh Start that it would have to voluntarily return the assets or face legal action. However, the receiver refused to do much more on behalf of the shareholders and asked to be dismissed from the proceedings, "after plaintiffs refused to pay him $2 million to take legal action against Fresh Start." From this point, it seems, the shareholders took matters into their own hands and decided to go after everyone who had apparently wronged them.
Reading through the 39-page document, it's obvious this case is a Gordian Knot that's going to require a lot of work to untangle before the truth manages to get exposed. One thing's for certain, though: The shareholders of CME aren't likely to see any of their lost investments in the near future.
Source: <a href=http://www.courthousenews.com/2010/08/26/29886.htm>Courthouse News
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