Clone-maker Psystar files for bankruptcy

Its legal fight with Apple is on hold for now

It's a case of bad news, slightly-less-bad news for Psystar, the Miami-based Mac clone-maker that has filed for Chapter 11 bankruptcy protection .

The documents for the court case, show Psystar blaming the economic climate for its current financial plight, saying that its suppliers raised prices, forcing Psystar to operate at "diminutive profit."

In its Chapter 11 petition, the company says that it has between one and 49 creditors and less than $50,000 of assets, while it has between $100,000 and $500,000 in liabilities. The list of creditors is topped by Carr & Farrell, the intellectual property law firm that was representing Psystar in its case against Apple (though the form oddly lists the nature of the claim as "Credit Card Processing"), and also includes shipping companies as UPS, FedEx, and DHL, as well as a debt of almost $12,000 in taxes to the IRS.

On the one hand, the bankruptcy filing suggests that Psystar misjudged its financial situation when it decided to engage in a protracted legal battle with Apple. There's long been a question as to where exactly Psystar got its capital, with many a conspiracy theorist pointing the finger at Microsoft. The Florida court has scheduled a hearing for the bankruptcy proceedings on June 5, at which point the entities funding Psystar will be at last disclosed.

However, this isn't a straight-up loss for Psystar. The bankruptcy filing means that the company's current legal battle with Apple over whether or not Psystar's clone business violates Apple's copyright is now on hold, pending the results of the bankruptcy proceedings. Meanwhile, the company gets an attempt to escape its predicament--in its filing, Psystar says it plans to come out of bankruptcy with a strong plan for its future.

The case, which began in July of 2008 with a copyright infringement suit by Apple and a subsequent antitrust countersuit by Psystar (which was later dismissed by a federal judge in November 2008) was scheduled to go to trial on Nov. 9 in the U.S. District Court, Northern California.

This story, "Clone-maker Psystar files for bankruptcy" was originally published by MacCentral.

Copyright © 2009 IDG Communications, Inc.

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