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Tech Bankruptcy
March 31, 2009
  Charter Communications
Cable giant Charter Communications, Inc. filed a chapter 11 petition on Friday in the Southern District of New York. According to the firm's press release, the company has already negotiated a restructuring plan, which it filed along with its other first day motions. 


March 21, 2009
  Moving out: Azteca Mobile; Skyward Mobile; North American Scientific; Progressive Games
Mobile virtual network operator Azteca Mobile filed a Chapter 7 petition in Kansas City at the beginning of the month. Azteca sold prepaid phone cards for the Sprint Nextel network, and focused on the US to Mexico market.

Closer to my home, Skyward Mobile, LLC filed a chapter 7 petition in Massachusetts. Skyward built mobile applications, including games, for use on cell phones.

Yesterday, Reuters reported that Progressive Gaming International Corp., which makes technology products for the casino industry, filed a chapter 7 petition. The petition was filed in the District of Nevada. The bulk of its assets were apparently foreclosed on in January.

Are you seeing a trend here? For all you real bankruptcy lawyers, all is not lost.

According to the Associate Press, North American Scientific, Inc., a provider of products and services for cancer treatment, filed a chapter 11 petition in the Central District of California on March 12. The company plans to reorganize.


March 15, 2009
  Can't Gamble With Your Domain Names!
In October I reported on a rather unusual decision by a Kentucky Judge holding that domain names were "gambling devices" under Kentucky law. In the case, Kentucky v. 141 Internet Domain Names, Judge Wingate considered a request by the Commonwealth of Kentucky that he order in rem seizure of several domain names under a state statute allowing seizure of gambling devices. Judge Wingate granted the request, finding that the domain names (which led to on-line gambling websites) were gambling devices, and that the state had in rem jurisdiction over the names despite the fact that the defendants, registrars and registries were all located outside the state. He ordered the relevant registries (most of the registrars being located outside the United States) to turn control of the domain names over to the Commonwealth of Kentucky.
If you like to play poker online, you can now breath easy. On January 20, 2009, an appellate panel held in a four to one opinion that "it stretches credulity to conclude that" a domain name could be a gambling device under the state's statutory definition. Thus, the lower court lacked in rem jurisdiction over the domain names. Interactive Media Entertainment v. Wingate, 2009 WL 142995 (Ky App. 2009). One judge, more credulous that the others, disagreed, stating that the entire compilation of the gambler's computer, gambling site's computers, software and domain name constituted a gambling device and the court could exercise jurisdiction over just the domain name portion of the "device."
The conclusion was clear enough though. You can't gamble with your domain name.


March 03, 2009
  Customer data just goes out the door at bankruptcy auctions.
CIO Magazine recently published an interesting article about the sometimes loose treatment of business and customer data in liquidations. It talks about improper disposition of sensitive customer data and the habit of trustees and liquidators of auctioning off computers without first scrubbing them of data.

This kind of problem certainly exists. I'm personally aware of one case where a weight-loss franchisee's employee threw customer records in the trash without shredding them first, and a reporter found them. This resulted in an investigation by the state attorney general's office. In another case, the data back-up disks for the debtor's on-line website were in a cardboard box, in a corner, and disappeared during the course of the furniture and equipment auction. 

With a failing business, data controls are fairly important. One of the items on the checklist definitely has to be identifying both sensitive data (such as payroll information and consumer information) and key data (such as financial information and asset related data) and developing a plan to ensure such data is properly preserved or disposed of, as needed.

The article includes a quote by Michael Fleming, a friend of mine who practices technology law in Minneapolis. Way to go Mike.

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March 02, 2009
  Failing Chip Makers and Others: Spansion, Visteon, Dynogen Pharmaceuticals
On Sunday, chip maker Spansion, Inc. filed a chapter 11 petition in the District of Delaware, case number 09-10690. I haven't heard of them, but this is a big one - more than a billion in assets. Spansion is the world's largest manufacturer of flash memory solutions, particularly for cell phones. According to the AP story, Spansion's problems are related to the decline in demand for consumer electronics.

Crain's Detroit Business predicts that Visteon will file for bankruptcy sometime before the end of April. Visteon provides technology and electronics systems for the automotive industry, so no great surprise there.

Last Monday, Dynogen Pharmaceuticals filed a chapter 7 petition in Massachusetts. Among the creditors, about six law firms owed more than $250,000. Debtor's counsel received payments for about the same sum prior to filing the petition. Nice work for a chapter 7 case.

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A blog discussing the impact of technology on bankruptcy law and practice.

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Location: Boston, Massachusetts, United States

Warren E. Agin is a partner in Swiggart & Agin, LLC, a boutique law firm in Boston, Massachusetts focusing on the needs of technology companies. Mr. Agin heads its bankruptcy department. The author of the book Bankruptcy and Secured Lending in Cyberspace (3rd Ed. West 2005), Mr. Agin also chaired the ABA's E-commerce and Insolvency Subcommittee from 1999 to 2005, co-chaired the Boston Bar Association's Internet and Computer Law Committee (2003-2005), and served on the American Bar Association's Standing Committee on Technology and Information Services (2008-2011). Mr. Agin currently co-chairs the Editorial Board of Business Law Today. A contributing editor to Norton Bankruptcy Law and Practice, 3d, and co-author of its chapter on intellectual property for the past fifteen years, he is author of numerous legal articles and addresses on topics of technology, internet and bankruptcy law.

Charter Communications
Moving out: Azteca Mobile; Skyward Mobile; North American Scientific; Progressive Games
Can't Gamble With Your Domain Names!
Customer data just goes out the door at bankruptcy auctions.
Failing Chip Makers and Others: Spansion, Visteon, Dynogen Pharmaceuticals
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