Former Stargate Dev's Shareholders Warp to Court

vansau

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May 25, 2010
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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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Starke

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Mar 6, 2008
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Bankruptcy cases are always a ***** to unravel, but, this looks insane. And a hell of a lot like a con.
 

oranger

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Wouldn't this fall under anti-trust law? anyways, last time I checked you didn't just hand over 10 million dollars to someone you just shook hands with, without a damn contract and some ownership.
 

Signa

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I guess we will never see a decent Stargate game. I'd even be happy with a Company of Heroes clone where you pit the SGA against various system lords and their Jaffa.
 

Nurb

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Dec 9, 2008
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stockholders are one of the biggest problems with gaming today... those are who matter most to game publishers and why "safe" bland shooters and clones of GTA and COD are pumped out instead of actually putting people who want to make great games in charge of making great games.

The corporate age of gaming sucks
 

kingcom

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I dont understand. They "Warp to Court" ? Is that like a legal term? Or some incorrect sci-fi joke?
 

Rigs83

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Feb 10, 2009
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kingcom said:
I dont understand. They "Warp to Court" ? Is that like a legal term? Or some incorrect sci-fi joke?
I think it is a reference from Star Trek because that show was built along the premise of Warp technology while Stargate was built on the premise of wormhole technology and faster than light travel tech that may or may not have also been called warp drives.
 

samsonguy920

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Mar 24, 2009
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Looks like the odds of the shareholders seeing a dime are real real slim, but doing this anyway may just help solve wtf went wrong here, as well as give future companies a lesson on what not to do when things go belly-up.
 

mad825

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Rigs83 said:
kingcom said:
I dont understand. They "Warp to Court" ? Is that like a legal term? Or some incorrect sci-fi joke?
I think it is a reference from Star Trek because that show was built along the premise of Warp technology while Stargate was built on the premise of wormhole technology and faster than light travel tech that may or may not have also been called warp drives.
rather twisty and turny.
it's like calling an Zat'nik'tel a "ray gun" or a "stun gun", although they are pretty much the same thing, that would be reductionism.
"beam" would have been better if it was a pun, the Asgards just love beaming straight into a scene or...taking supplies from a secret military base.
 

kingcom

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Rigs83 said:
kingcom said:
I dont understand. They "Warp to Court" ? Is that like a legal term? Or some incorrect sci-fi joke?
I think it is a reference from Star Trek because that show was built along the premise of Warp technology while Stargate was built on the premise of wormhole technology and faster than light travel tech that may or may not have also been called warp drives.
Im aware i was making a somewhat sarcastic quip.
 

Starke

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garbled quote trees said:
psrdirector said:
Cheyenee Entertainment in general was just a con.

oranger said:
Wouldn't this fall under anti-trust law? anyways, last time I checked you didn't just hand over 10 million dollars to someone you just shook hands with, without a damn contract and some ownership.
Fresh Start was formed by former Cheyenne employees, so it wasn't exactly just a hand-shake.
I think your first statement sums up the 2nd in a nut shell. They wanted to steal all of Cheyenee's property so they could keep existing as a company free form the debt they had acquired the first time around. I think those employees are going to be screwed if they can be proven aware of what was going on.
Legally proving knowledge can be another real pain in the ass. You can tell someone something, but can you prove it? Now, on a business level it can be somewhat easier to track, but this is a large part of why bankruptcy cases are such a mess.
 

Jared

The British Paladin
Jul 14, 2009
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...again its one of those cases where, desite how much they try and sue them it isnt going toreally see much from it...due to the fact they prolly dont have anything anyway
 

Albino Boo

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Jun 14, 2010
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Jaredin said:
...again its one of those cases where, desite how much they try and sue them it isnt going toreally see much from it...due to the fact they prolly dont have anything anyway
If it was worth nothing why did they bother to transfer it then? The very fact that assets were transfered indicates that they had some value and the poeple that owned the company are entitled that money.
 

thenumberthirteen

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Dec 19, 2007
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Damn. I'd hoped this whole mess was done with. Af least we got one game out of CME before it went under.

Also, the Escapist beating me to a Stargate story?! My apologies to the SGFC. I'm on holiday and have to use my phone.
 

BlindMessiah94

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Nov 12, 2009
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thenumberthirteen said:
Damn. I'd hoped this whole mess was done with. Af least we got one game out of CME before it went under.

Also, the Escapist beating me to a Stargate story?! My apologies to the SGFC. I'm on holiday and have to use my phone.
That's what I said when I saw it thirteen. I was wondering why it wasn't in my stargate news lol.

But you are allowed to go on holidays...I suppose.
 

thenumberthirteen

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Dec 19, 2007
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BlindMessiah94 said:
thenumberthirteen said:
Damn. I'd hoped this whole mess was done with. Af least we got one game out of CME before it went under.

Also, the Escapist beating me to a Stargate story?! My apologies to the SGFC. I'm on holiday and have to use my phone.
That's what I said when I saw it thirteen. I was wondering why it wasn't in my stargate news lol.

But you are allowed to go on holidays...I suppose.
When I get back expect another mega update.