06-21-2004, 10:19 PM
Posted 21/06/2004
Source Newsarama
According to numerous sources speaking to Newsarama, as of June 18th, CrossGen has laid off all but a skeleton staff of employees (including legal counsel), with company founder Mark Alessi reportedly telling the departing workers individually that he was going to file for Chapter 11 bankruptcy protection for the company. Chapter 11 protection allows for the business to continue operating while it reorganizes its financial picture, keeping the business alive, while paying off creditors over time. Sources reported to Newsarama that CrossGen founder Mark Alessi hopes to find investors to bring the company out of Chapter 11 and relaunch at a later date. Reportedly, many inside CrossGen advised Alessi to file Chapter 11 months ago. It's unclear though, how, with limited to no product coming out, and no investors on the horizon (with numerous deals reportedly having fallen through), the company would be able to raise capital under the protection of the Court. As of June 20th, no filing for CrossGen is listed in the U.S. Bankruptcy Court. The alleged filing was the latest upheaval for the company since the resignations of Bill Rosemann, Chris Oarr; and Mike Beattie in early April and the later cancellations of virtually all of its line. The most recent official comments on CrossGenâs prospects and future were made by Alessi himself on the CrossGen messageboards on May 3rd, when he wrote:
Yes, CrossGen is struggling through some difficult times. No, weâre not dead yet. Not even close. No, I canât give you all the information youâd like to know at this time. Have we had to make the difficult decision to let some titles go? You bet. Have we enjoyed having to trim staff as a result? Not a bit. Do we like seeing loyal staffers become jobless? Of course not! Are we done for? Hell, no! Can we give you all the details of our upcoming transformation? Not without violating agreements weâve made with other business entities. I want to thank you all for your support during this difficult transition, and I look forward to the day when we can make the announcements you have all been waiting for.
While Diamondâs Previews is yet to ship for June, listing the comics on sale in September, the text file of the catalog shows that the publisher is soliciting no books for the month. Additionally, CrossGen will not be an exhibitor at Comic Con International at San Diego in July. Since the time of the April resignations, Newsarama has learned that several former CrossGen staff members have had complaints filed against them, alleging embezzlement which reportedly comes from using CrossGen corporate credit cards for unapproved purchases. In regards to leaving dozens of freelance and staff unpaid during what was referred to as ârestructuringâ for a time, former CGâer Andy Smith filed a lawsuit against the publisher for monies owed, and won his case in early May. Newsarama has learned that several other creators who are still owed money by CrossGen have, or are in the process of bringing suit against the company for the owed wages, through Smithâs lawyer.
~~~~~~~~~~
Newsarama has acquired a copy of CrossGenâs Chapter 11 bankruptcy filing, which was filed Friday at the Tampa US Bankruptcy Court. The papers were filled out on June 18th, and do resolve that the company â CrossGen Entertainment, Inc. has filed for Chapter 11 bankruptcy protection from its creditors. The filing covers CrossGen Comics, Code 6 Comics, and CG Entertainment. The filing identifies the 20 largest unsecured creditors of CrossGen:
Quebecor World, Montreal (printer of CrossGen comics) - $1,478,893.85
Branded Entertainment, LLC (Hollywood agency developing CG properties for other media, home to Michael Uslan) - $437,868.12
American Express - $402,825.20
Foley & Lardner (law firm) - $262,382.34
Automatic Data Processing (payroll company) - $155,159.82
Fortus Software, LLC - $109,736.45
Newhouse Porter, LLC - $150,547.50
Hunton & Williams (law firm) - $102,985.25
Wizard Entertainment - $83,798.00
580 Industrial, Ltd. (lease agent for office space) - $83,009.65
CIT Technology Financial (lease agent for office technology) - $50,419.85
Citicorp Vendor Finance - $25,816.71
Reed Business Information (publisher of Publisherâs Weekly) - $22,248.21
Diamond Comic Distributors - $22,016.54
Absolute Exhibits (trade show exhibit designer/manufacturer) - $19,639.75
CGS Publishing Technologies - $17,224.54
Westin Horton Plaza (San Diego CCI hotel) - $16,632.00
Luke Ross (creator) - $16,500.00
Fabrizio Fiorentino (creator) - $16,450.00
Hyde Park Capital - $15,790.69
The total debt listed to the above creditors is stated to be $3,404,996.48, with over one million dollars owed to Quebecor. It is marked that the estimated number of creditors ranges between 200 and 999 (the category division), with $1 to $10 million estimated as assets, and $10 to $50 million estimated in debts (meaning that between $7 and $47 million is owed to secured creditors). The debtor (CrossGen) also estimates that funds will be available for distribution to unsecured creditors. The meeting of creditors will take place on July 14th at 3:30 pm. The deadline for creditors to file a proof of a claim against CrossGen will be announced at a later time.
CrossGen failed to file a summary of schedules and financial affiars with their Chapter 11 filing, and has 15 days from June 18th to file said documents. Under Chapter 11, the debtor must pay secured creditors of give up stated collateral, while unsecured creditors (those listed above) are paid according to a plan laid out by the debtor, which the unsecured creditors may accept or reject. As stated above, the meeting date for the creditors has been set, but CrossGen has yet to file a plan.
Update
To clarify the filing somewhat, âCrossGen Entertainmentâ has filed for Chapter 11. As reported by Newsarama last April, the larger company split itself into CrossGen Entertainment and subsidiary companies (LLCs). Rod Anderson, bankruptcy counsel for CrossGen said that, in this instance, only the parent company, âCrossGen Entertainmentâ has filed, but none of the subsidiaries have filed â although the original filing lists d/b/a (doing business as) CrossGen Comics and Code 6 Comics, so presumably, those two subsidiaries are included in the Chapter 11.
CrossGen Entertainmentâs other subsidiaries are:
CrossGen Intellectual Property, LLC: CGIP holds all CGE content intellectual property (IP).
CrossGen Technologies, LLC: CGT holds all CGE technology IP and manages technology IP creation, development, production, and application.
CrossGen Publishing, LLC: CGPub publishes all print projects, including CGE Ancillary, Code 6, CrossGen Universe, and foreign publishing.
CrossGen Media, LLC: CGM is responsible for feature films, television programs, video games, websites, merchandise, and additional interactive products.
CrossGen Productions, LLC: A subsidiary of CGM, CGP produces feature films and television programs.
CrossGen Interactive, LLC: A subsidiary of CGM, CGI is responsible for interactive publishing, video games, and role-playing games.
CrossGen Education, LLC: CGEd publishes education materials.
Comics On The Web, LLC: COW is responsible for internet publishing, including Comics On The Web™.
CrossGen also spun of MegaCon into its own LLC, but that was sold to the showâs organizer, Beth Widera.
By keeping the subsidiaries out of bankruptcy, CrossGenâs intellectual property should remain out of the Chapter 11 proceedings as well. Looking at CrossGen Intellectual Property, LLC as an example, as reported previously, Blue Ridge Investors, Mark Alessi, Tom Alessi and Dee Gee Entertainment are that LLCâs secured creditors. In the case of CGIP, LLC, the collateral on both Alessisâ secured loans is the intellectual property itself, while other secured creditorsâ loans lay claims against the assets of the debtor, excluding intellectual property, and Dee Gee claims a portion of Sojourn, Route 666, and Ruse, but not the IP outright.
The attached agreement (a full listing of the companyâs intellectual property) with Mark Alessiâs filing includes two pending patents, one for a âMethod of Displaying Comic Books and Similar Publications on a Computerâ and the other for a âSystem for Publishing Content on a Portable Digital Storage Medium.â The remainder of the list includes the copyrights and trademarks for all of CrossGenâs properties from the well known to those concepts and properties which the company registered, but to date, has never exploited, such as Kid Sigil, BeeVee, Squit, and Taoshift.
Other properties listed in the Exhibit include all of CrossGenâs Code 6 properties (Demonwars, The Crossovers, and Lady Death) except the recently announced Abadazad. Also on the list is the rights CrossGenâs library (monthlies and trades), âComics on the Web,â the term âMegaCon,â and the CrossGen sigil.
In the case of both secured parties (Blue Ridge and Alessi), if the debtor (CrossGen) defaults on the loans by missing scheduled payments, Alessi and Blue Ridge can claim the collateral as payment. Likewise, if the efforts to right the ship that is CrossGen are unsuccessful and the company is forced to declare bankruptcy, secured creditors (Blue Ridge and Alessi) have priority over unsecured creditors (employees, and others to whom the company owed money). In addition, lenders can often trade the collateral for the debt.
Comparatively, the major secured creditors of CGE, Inc. include: Blue Ridge Investors (collateral including the IP of CGE â although that was corrected by Blue Ridge with the statement that it had no security interest in the IP, and all assets excluding IP in a separate agreement); Dee Gee Entertainment (collateral including a security interest in the first $300,000 of proceeds from Ruse, Sojourn and Route 666, and an interest in the copyrights and trademarks); Tom Alessi (terminated with respect to security interests); Mark Alessi (terminated with respect to security interests).
Technically, as the company was restructured in early 2003, CGE should hold no intellectual property. In short, the Chapter 11 filing only affects CrossGenâs comics division, minus the IP. Through the remaining LLCs the CrossGen properties can continue to be licensed, used, and exploited in other media â or through other programs, such as a licensing of the Comics on the Web proprietary technology, or the educational program, Bridges (which is currently being âre-definedâ).
Whatâs not clear at this point are specifically what CGEâs assets (stated on the filing to be between $1 and $10 million) are in relation to the subsidiaries. For instance, CGEâs ownership of a sub company could be considered an asset of the larger company, meaning that the subsidiaries could be sold as raise money for CGE to pay its debts.
Additionally, itâs also unclear what CrossGen will be listing as assets under Code 6. As per the agreement that prospective creators came in under, the author would retain 25% ownership of the property â while the remaining respective 75% of the Code 6 characters would be listed under CGEIP, LLC. As CrossGenâs Code 6 FAQ stated: âIf you are the 25% owner, you gain the benefit of the revenue generated from your property in all areas including publishing, movies, video games, etc.â
Even if the creator is fired, the FAQ states: âYou would always continue to be the 25% owner and continue to receive 25% of any profits from all revenue sources including comics publishing, movies, video games, etc. But you would no longer receive page rate compensation.
âThere is no length of term in the Code 6 agreement. It is an agreement in perpetuity. Code 6 will continue to expend resources to create ancillary opportunities for your property forever. Because of that, Code 6 will continue to be the majority owner and you will continue to be the 25% owner as well sharing in all profits generated from all sources.
âThe Code 6 agreement continues in perpetuity. Code 6 will continue to expend resources to create ancillary opportunities for your property forever. Because of that, Code 6 will continue to be the majority owner and you will continue to be the 25% owner as well sharing in all profits generated from all sources.â
Developing...
Source Newsarama
According to numerous sources speaking to Newsarama, as of June 18th, CrossGen has laid off all but a skeleton staff of employees (including legal counsel), with company founder Mark Alessi reportedly telling the departing workers individually that he was going to file for Chapter 11 bankruptcy protection for the company. Chapter 11 protection allows for the business to continue operating while it reorganizes its financial picture, keeping the business alive, while paying off creditors over time. Sources reported to Newsarama that CrossGen founder Mark Alessi hopes to find investors to bring the company out of Chapter 11 and relaunch at a later date. Reportedly, many inside CrossGen advised Alessi to file Chapter 11 months ago. It's unclear though, how, with limited to no product coming out, and no investors on the horizon (with numerous deals reportedly having fallen through), the company would be able to raise capital under the protection of the Court. As of June 20th, no filing for CrossGen is listed in the U.S. Bankruptcy Court. The alleged filing was the latest upheaval for the company since the resignations of Bill Rosemann, Chris Oarr; and Mike Beattie in early April and the later cancellations of virtually all of its line. The most recent official comments on CrossGenâs prospects and future were made by Alessi himself on the CrossGen messageboards on May 3rd, when he wrote:
Yes, CrossGen is struggling through some difficult times. No, weâre not dead yet. Not even close. No, I canât give you all the information youâd like to know at this time. Have we had to make the difficult decision to let some titles go? You bet. Have we enjoyed having to trim staff as a result? Not a bit. Do we like seeing loyal staffers become jobless? Of course not! Are we done for? Hell, no! Can we give you all the details of our upcoming transformation? Not without violating agreements weâve made with other business entities. I want to thank you all for your support during this difficult transition, and I look forward to the day when we can make the announcements you have all been waiting for.
While Diamondâs Previews is yet to ship for June, listing the comics on sale in September, the text file of the catalog shows that the publisher is soliciting no books for the month. Additionally, CrossGen will not be an exhibitor at Comic Con International at San Diego in July. Since the time of the April resignations, Newsarama has learned that several former CrossGen staff members have had complaints filed against them, alleging embezzlement which reportedly comes from using CrossGen corporate credit cards for unapproved purchases. In regards to leaving dozens of freelance and staff unpaid during what was referred to as ârestructuringâ for a time, former CGâer Andy Smith filed a lawsuit against the publisher for monies owed, and won his case in early May. Newsarama has learned that several other creators who are still owed money by CrossGen have, or are in the process of bringing suit against the company for the owed wages, through Smithâs lawyer.
~~~~~~~~~~
Newsarama has acquired a copy of CrossGenâs Chapter 11 bankruptcy filing, which was filed Friday at the Tampa US Bankruptcy Court. The papers were filled out on June 18th, and do resolve that the company â CrossGen Entertainment, Inc. has filed for Chapter 11 bankruptcy protection from its creditors. The filing covers CrossGen Comics, Code 6 Comics, and CG Entertainment. The filing identifies the 20 largest unsecured creditors of CrossGen:
Quebecor World, Montreal (printer of CrossGen comics) - $1,478,893.85
Branded Entertainment, LLC (Hollywood agency developing CG properties for other media, home to Michael Uslan) - $437,868.12
American Express - $402,825.20
Foley & Lardner (law firm) - $262,382.34
Automatic Data Processing (payroll company) - $155,159.82
Fortus Software, LLC - $109,736.45
Newhouse Porter, LLC - $150,547.50
Hunton & Williams (law firm) - $102,985.25
Wizard Entertainment - $83,798.00
580 Industrial, Ltd. (lease agent for office space) - $83,009.65
CIT Technology Financial (lease agent for office technology) - $50,419.85
Citicorp Vendor Finance - $25,816.71
Reed Business Information (publisher of Publisherâs Weekly) - $22,248.21
Diamond Comic Distributors - $22,016.54
Absolute Exhibits (trade show exhibit designer/manufacturer) - $19,639.75
CGS Publishing Technologies - $17,224.54
Westin Horton Plaza (San Diego CCI hotel) - $16,632.00
Luke Ross (creator) - $16,500.00
Fabrizio Fiorentino (creator) - $16,450.00
Hyde Park Capital - $15,790.69
The total debt listed to the above creditors is stated to be $3,404,996.48, with over one million dollars owed to Quebecor. It is marked that the estimated number of creditors ranges between 200 and 999 (the category division), with $1 to $10 million estimated as assets, and $10 to $50 million estimated in debts (meaning that between $7 and $47 million is owed to secured creditors). The debtor (CrossGen) also estimates that funds will be available for distribution to unsecured creditors. The meeting of creditors will take place on July 14th at 3:30 pm. The deadline for creditors to file a proof of a claim against CrossGen will be announced at a later time.
CrossGen failed to file a summary of schedules and financial affiars with their Chapter 11 filing, and has 15 days from June 18th to file said documents. Under Chapter 11, the debtor must pay secured creditors of give up stated collateral, while unsecured creditors (those listed above) are paid according to a plan laid out by the debtor, which the unsecured creditors may accept or reject. As stated above, the meeting date for the creditors has been set, but CrossGen has yet to file a plan.
Update
To clarify the filing somewhat, âCrossGen Entertainmentâ has filed for Chapter 11. As reported by Newsarama last April, the larger company split itself into CrossGen Entertainment and subsidiary companies (LLCs). Rod Anderson, bankruptcy counsel for CrossGen said that, in this instance, only the parent company, âCrossGen Entertainmentâ has filed, but none of the subsidiaries have filed â although the original filing lists d/b/a (doing business as) CrossGen Comics and Code 6 Comics, so presumably, those two subsidiaries are included in the Chapter 11.
CrossGen Entertainmentâs other subsidiaries are:
CrossGen Intellectual Property, LLC: CGIP holds all CGE content intellectual property (IP).
CrossGen Technologies, LLC: CGT holds all CGE technology IP and manages technology IP creation, development, production, and application.
CrossGen Publishing, LLC: CGPub publishes all print projects, including CGE Ancillary, Code 6, CrossGen Universe, and foreign publishing.
CrossGen Media, LLC: CGM is responsible for feature films, television programs, video games, websites, merchandise, and additional interactive products.
CrossGen Productions, LLC: A subsidiary of CGM, CGP produces feature films and television programs.
CrossGen Interactive, LLC: A subsidiary of CGM, CGI is responsible for interactive publishing, video games, and role-playing games.
CrossGen Education, LLC: CGEd publishes education materials.
Comics On The Web, LLC: COW is responsible for internet publishing, including Comics On The Web™.
CrossGen also spun of MegaCon into its own LLC, but that was sold to the showâs organizer, Beth Widera.
By keeping the subsidiaries out of bankruptcy, CrossGenâs intellectual property should remain out of the Chapter 11 proceedings as well. Looking at CrossGen Intellectual Property, LLC as an example, as reported previously, Blue Ridge Investors, Mark Alessi, Tom Alessi and Dee Gee Entertainment are that LLCâs secured creditors. In the case of CGIP, LLC, the collateral on both Alessisâ secured loans is the intellectual property itself, while other secured creditorsâ loans lay claims against the assets of the debtor, excluding intellectual property, and Dee Gee claims a portion of Sojourn, Route 666, and Ruse, but not the IP outright.
The attached agreement (a full listing of the companyâs intellectual property) with Mark Alessiâs filing includes two pending patents, one for a âMethod of Displaying Comic Books and Similar Publications on a Computerâ and the other for a âSystem for Publishing Content on a Portable Digital Storage Medium.â The remainder of the list includes the copyrights and trademarks for all of CrossGenâs properties from the well known to those concepts and properties which the company registered, but to date, has never exploited, such as Kid Sigil, BeeVee, Squit, and Taoshift.
Other properties listed in the Exhibit include all of CrossGenâs Code 6 properties (Demonwars, The Crossovers, and Lady Death) except the recently announced Abadazad. Also on the list is the rights CrossGenâs library (monthlies and trades), âComics on the Web,â the term âMegaCon,â and the CrossGen sigil.
In the case of both secured parties (Blue Ridge and Alessi), if the debtor (CrossGen) defaults on the loans by missing scheduled payments, Alessi and Blue Ridge can claim the collateral as payment. Likewise, if the efforts to right the ship that is CrossGen are unsuccessful and the company is forced to declare bankruptcy, secured creditors (Blue Ridge and Alessi) have priority over unsecured creditors (employees, and others to whom the company owed money). In addition, lenders can often trade the collateral for the debt.
Comparatively, the major secured creditors of CGE, Inc. include: Blue Ridge Investors (collateral including the IP of CGE â although that was corrected by Blue Ridge with the statement that it had no security interest in the IP, and all assets excluding IP in a separate agreement); Dee Gee Entertainment (collateral including a security interest in the first $300,000 of proceeds from Ruse, Sojourn and Route 666, and an interest in the copyrights and trademarks); Tom Alessi (terminated with respect to security interests); Mark Alessi (terminated with respect to security interests).
Technically, as the company was restructured in early 2003, CGE should hold no intellectual property. In short, the Chapter 11 filing only affects CrossGenâs comics division, minus the IP. Through the remaining LLCs the CrossGen properties can continue to be licensed, used, and exploited in other media â or through other programs, such as a licensing of the Comics on the Web proprietary technology, or the educational program, Bridges (which is currently being âre-definedâ).
Whatâs not clear at this point are specifically what CGEâs assets (stated on the filing to be between $1 and $10 million) are in relation to the subsidiaries. For instance, CGEâs ownership of a sub company could be considered an asset of the larger company, meaning that the subsidiaries could be sold as raise money for CGE to pay its debts.
Additionally, itâs also unclear what CrossGen will be listing as assets under Code 6. As per the agreement that prospective creators came in under, the author would retain 25% ownership of the property â while the remaining respective 75% of the Code 6 characters would be listed under CGEIP, LLC. As CrossGenâs Code 6 FAQ stated: âIf you are the 25% owner, you gain the benefit of the revenue generated from your property in all areas including publishing, movies, video games, etc.â
Even if the creator is fired, the FAQ states: âYou would always continue to be the 25% owner and continue to receive 25% of any profits from all revenue sources including comics publishing, movies, video games, etc. But you would no longer receive page rate compensation.
âThere is no length of term in the Code 6 agreement. It is an agreement in perpetuity. Code 6 will continue to expend resources to create ancillary opportunities for your property forever. Because of that, Code 6 will continue to be the majority owner and you will continue to be the 25% owner as well sharing in all profits generated from all sources.
âThe Code 6 agreement continues in perpetuity. Code 6 will continue to expend resources to create ancillary opportunities for your property forever. Because of that, Code 6 will continue to be the majority owner and you will continue to be the 25% owner as well sharing in all profits generated from all sources.â
Developing...