Star Trek Online : Kohnke Sues Perpetual

Ryker

December 11, 2007 - Details surrounding Perpetual Entertainment's dealings subsequent to the cancellation of Gods & Heroes are coming to light as Ten Ton Hammer uncovered court documents of a new complaint just submitted to California's Superior Court last week. The allegation: the San Francisco-based developer fraudulently transferred valuable assets (like the Star Trek Online license) to an insider-owned corporation at a loss, leaving those with a financial stake in the now-defunct MMORPG Gods & Heroes: Rome Rising without hope of payment save legal recourse.

According to documents received last Friday in California's Superior Court for the County of San Francisco, public relations firm Kohnke Communications, Inc. – best known for promoting the efforts of numerous MMORPG developers like EA Mythic, Red 5, Turbine, and NetDevil – is suing Perpetual Entertainment, Inc. for breach of contract, fraudulent transfer, fraud, and various other charges for damages between $80,000 and $290,000, perhaps much more in terms of punitive or exemplary damages.

The complaints stem from allegations that Perpetual sold valuable assets like the Star Trek Online (STO) license to P2 Entertainment, Inc., a thinly veiled yet separate corporate entity, before executing the Perpetual ABC or "Assignment for the Benefit of Creditors" (a liquidation mechanism allowed by states like California as a less expensive alternative to the extensive litigation surrounding bankruptcy). The case could have drastic implications for future of the pre-alpha Star Trek Online title.

Pushing the Corporate "Reset Button"?

The problem was in Perpetual's valuation of transferred assets and the timing of the disclosure, or apparent lack of disclosure, of P2 and the ABC. While the ABC was executed on October 10th, 2007 and the sale of select Perpetual assets at less than market value allegedly took place prior to that date, Kohnke and other creditors had not been informed about the ABC's execution more than a month and a half later. The transfer of assets left Perpetual financially destitute while Perpetual representatives continued to promote an image of calm in the wake of the cancellation of Gods & Heroes: Rome Rising. This, according to the complaint, constitutes a breach of Perpetual's contract with Kohnke with intent to defraud and a violation of the California Uniform Fraudulent Transfers Act.

To quote the complaint, which in itself reads like a courtroom drama: "Star Trek Online Executive Producer Daron Stinnett published comments on November 28, 2007 at startrek-online.net, flatly denying that Perpetual was in the process of liquidating and representing that Perpetual was still an ongoing concern: 'There was also a report about PE liquidating our assets. That report relates to a transaction that took place a while back. And while I can't go into details right now, I want to assure the community that the entire Star Trek team is still here working hard…'

"Just one day later, the story changed dramatically. On November 29, 2007, Keene [Joseph Keene, an officer of both Perpetual and P2 with a 'significant equity stake in the company'] confirmed to counsel for Kohnke that Perpetual had executed the ABC, and that all of Perpetual's assets were in the hands of Perpetual ABC. However, Keene also admitted that, prior to executing the ABC, Perpetual transferred certain assets to P2.

"On information and belief, the assets transferred to P2 include Perpetual Entertainment trademarks and copyrights, the perpetual.com domain name, and assets related to Star Trek Online, including code and the license… Perpetual received less than market value for the assets it transferred to P2, and the transfer made Perpetual insolvent (or worsened Perpetual's existing insolvency)."

Sai'nu · Posted: Fri Dec 14, 2007 7:19 am Post subject:

/pointatDevLogbelow

Dec 4th update on their development log... so I'm just wondering what keeps them afloat with things like this popping up?
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DemonGurg · MERCS Karma: Add Karma Joined: 06 Dec 2006 Posts: 384

does this mean no star trek online?!
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Shensenn · Posted: Fri Dec 14, 2007 8:17 pm Post subject:

Possibly. More than likely STO will still be released, but the outcome of the case could drastically affect the state of the game at release. In other words, if they take a big loss you will probably not see the nicely polished game they intended.
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Rinna · Posted: Fri Dec 14, 2007 8:34 pm Post subject:

Dew · Posted: Fri Dec 14, 2007 11:50 pm Post subject:

We jinxed it moving the section out into the open...
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Shensenn · Posted: Sat Dec 15, 2007 12:11 am Post subject:

Lol, no doubt. smile

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Jaminos · Posted: Sat Dec 15, 2007 3:41 am Post subject:

I am tired of half done MMO's. I rather wait another six months for a complete MMO (well as complete as they get now days) rather then a half a$$ed MMO like I am used to.
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Jabe Adaks · Posted: Mon Dec 17, 2007 6:00 am Post subject:

Damages of $80,000 and $290,000 and even assuming other damages amounting 3x or 4x that amount is chump change. Most of the devs for this game easily clear 120k per person per year and there's probably a dozen of them working on it.

In other words, I am not worried. The Star Trek franchise is betting the farm on this game and it is far more bullet proof than a scant few million bucks.

Jabe
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Dew · Posted: Mon Dec 17, 2007 6:32 am Post subject:

Lets hope so, we need more quality space MMOs out there.
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Jaminos · Posted: Mon Dec 17, 2007 7:50 am Post subject:

Jabe Adaks · Posted: Mon Dec 17, 2007 4:07 pm Post subject:

Alright forget it, the whole franchise is going down the tubes...

http://slashdot.org/article.pl?sid=07/12/16/229238

Hide this forum before something else happens!!! big grin

Jabe
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...survivor of the great cloak debate of '07
...returning user of the great closure of '08

Dew · Posted: Mon Dec 17, 2007 9:11 pm Post subject:

Lets leave it for awhile and see if a script pops up killing off Ryker.....
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eboobi · Posted: Mon Dec 17, 2007 10:18 pm Post subject:

Why does everyone hate Ryker? I mean he was kind of a pussy and wouldn't take his own command... but what the hell.
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Shensenn · Posted: Mon Dec 17, 2007 10:45 pm Post subject:

I don't know that I could effectively put that into words lol
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