Konami Faces Another Def Jam Rapstar Lawsuit

Andy Chalk

One Flag, One Fleet, One Cat
Nov 12, 2002
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Konami Faces Another Def Jam Rapstar Lawsuit


City National Bank says Konami and Autumn Games defrauded it out of $14 million.

Two of the companies behind Def Jam Rapstar [http://www.amazon.com/Def-Jam-Rapstar-Bundle-Xbox-360/dp/B003JD7QVG/ref=sr_1_1?ie=UTF8&qid=1337807301&sr=8-1] are facing more legal trouble, this time from City National Bank, which claims in a lawsuit that Konami and Autumn Games lied in order to secure a $14 million line of credit, which would be covered by revenues from the sale of the game.

"CNB has recently learned that defendants' representations concerning financial conditions and repayment of the loan - both before and after the loan was approved - were false at the time they were made and that defendants never had any intention of repaying the loan as promised," the lawsuit says. "Rather than paying game-related proceeds directly to CNB as agreed, defendant have kept all game-related proceeds for themselves and have refused to remit any such proceeds to CNB."

Even after the loan was approved, the companies made "baseless and unrealistic projections" that Def Jam Rapstar would ship 2.5 million units in its first year of release. The bank also claimed that Autumn Games said it would use a $1 million advance from Konami to pay down the loan, but failed to do so. Furthermore, it's allegedly blown through nearly the entire line of credit.

"To date, defendants still have not paid CNB a single penny of the principal amount that is due, and they continue to insist that none of the proceeds from sales of the game are owed to CNB and/or available for repayment," the suit claims.

The lawsuit follows one filed earlier [http://www.escapistmagazine.com/news/view/116586-EMI-Sues-Def-Jam-Rapstar-Devs] this year by EMI over ownership rights to several of the songs in the game, which has already made life miserable for producer 4mm Games. That suit is keeping 4mm from getting more funding, which has left the future of the studio in doubt.

City National Bank is seeking nearly $9 million for fraud, negligent misrepresentation, breach of contract and other such things. Neither Konami nor Autumn Games have commented.

Sources: GamesIndustry [http://www.courthousenews.com/2012/05/23/46742.htm]


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Therumancer

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Nov 28, 2007
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Hmmm, well my gut feeling is that the bottom line is the game underperformed and ran into legal troubles, and now the creditors who provided money for the production are trying to cut their losses. I'd imagine the criminal claims are largely BS to put pressure on the game developers and Konami, and to get the case heard. Banks generally perform some pretty in depth investigations with that amount of money on the line, and I doubt they had any illusions about the financial realities of the company... banks aren't that stupid, and actually tend to be quite paranoid. The bank probably just wants to get a chunk of money back before legal fees eat everything the company made off of it. The company is probably justifying not paying the bank by saying that there are no real profits until their expenses (including the legal battles) are resolved.

Time will tell, but that's my guess. I'll be surprised if we hear any more about it.

That said music games are pretty much yesterday's news.... I'm actually kind of surprised not only that anyone is still making them on this level, but that there are still contract disputes over songs given how many times that happened before (you'd expect people to watch out for owenership complexities), and that anyone actually either claimed, or believed (equally disbelievable) that 2.5 million copies would be moved as things are now. 4 years ago maybe, right now this seems almost retro... :)
 

gigastar

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Sep 13, 2010
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Wait, is that 9 million on its own or 9 million in addition to the 14 million that wasnt paid back?

It doesnt make sense that a company is asking for less than what it actually lost in a lawsuit...
 

Therumancer

Citation Needed
Nov 28, 2007
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Mygaffer said:
Therumancer said:
Hmmm, well my gut feeling is that the bottom line is the game underperformed and ran into legal troubles, and now the creditors who provided money for the production are trying to cut their losses. I'd imagine the criminal claims are largely BS to put pressure on the game developers and Konami, and to get the case heard. Banks generally perform some pretty in depth investigations with that amount of money on the line, and I doubt they had any illusions about the financial realities of the company... banks aren't that stupid, and actually tend to be quite paranoid. The bank probably just wants to get a chunk of money back before legal fees eat everything the company made off of it. The company is probably justifying not paying the bank by saying that there are no real profits until their expenses (including the legal battles) are resolved.

Time will tell, but that's my guess. I'll be surprised if we hear any more about it.

That said music games are pretty much yesterday's news.... I'm actually kind of surprised not only that anyone is still making them on this level, but that there are still contract disputes over songs given how many times that happened before (you'd expect people to watch out for owenership complexities), and that anyone actually either claimed, or believed (equally disbelievable) that 2.5 million copies would be moved as things are now. 4 years ago maybe, right now this seems almost retro... :)


Why do people insist on telling us what they think when they have absolutely no idea as to the veracity of the claims? You have no idea if the claims are true or false, why do you feel compelled to spew out a lot of baseless conjecture?
Because this is a message board attached to an article so people can discuss what they think about what's being said?

That said I never claimed to know anything, I started with "my gut feeling is".

At any rate, who is "us", or is that as in the royal "we".

If conjecture on articles and such bothers you, then reading the attached responses/forums probably isn't a good idea. Just saying.
 

Mortuorum

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Oct 20, 2010
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"CNB has recently learned that defendants' representations concerning financial conditions and repayment of the loan - both before and after the loan was approved - were false at the time they were made and that defendants never had any intention of repaying the loan as promised," the lawsuit says.
Now that's gangsta.