Psystar's legal costs in Apple fight push it into bankruptcy

Bill from law firm accounts for 63% of Mac clone maker's outside debt

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The company promised it would come out of Chapter 11 intact. "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 they have grown to enjoy and trust," it said in a court filing. "Debtor plans to make payment of all debts and also, continue to provide support for its customers."

Psystar first made news in April 2008, when it starting selling Mac clones with Apple's Leopard operating system preinstalled. Apple began the legal wrangling when it accused Psystar of copyright and software licensing violations, and Psystar struck back with a countersuit that charged Apple with, among other things, antitrust violations. Those claims were tossed out by U.S. District Court Judge William Alsup last November.

The lawsuits are on hold for at least several months while the bankruptcy case works it way through the court. On Monday, Alsup ordered the stay, and scheduled a conference with both parties for Dec. 10, 2009.

Psystar's financial problems shouldn't be a surprise. Last year, noted intellectual property attorney Carole Handler, a partner at Wildman, Harrold, Allen & Dixon, said that Apple's lawsuit was aimed at killing the clone maker.

When Apple sued Psystar in July 2008, it demanded that the clone maker recall computers it sold with Mac OS X 10.5 preinstalled, a move that Handler said "would likely put Psystar out of business."

Psystar must provide the bankruptcy court with numerous documents by Friday, including recent tax returns and a current financial statement.

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Copyright © 2009 IDG Communications, Inc.

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