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Is this legal?

M

Mill

Lifer
Let's say Company A(who bought another company) uses Point of Sale Software from Company B(who was recently bought). Company A received the software when they bought a company and did NOT assume any debt. The company they purchased had been through bankruptcy, but any debt was not assumed at all. Company B was the creator of the software that was being used by Company A. Another Company comes in and buys Company B. After doing so they want payment from the defunct old Company(matter was already settled). They've used threats and harassment, but today they dialed into a server and killed the program. I'm not sure why/how they got access, but it knocked down the POS network and left Company A unable to transact business. Company A had 1000's of visitors and HAD to have the POS up and running or they would lose thousands if not tens of thousands of dollars.

I know it is very confusing, but please bare with me. If the prior debt was from another Company, and wasn't assumed, then how can they say Company A is liable? Not only that, but Company B was FINE with things until bought out by another company. Shouldn't they have to get a court order to do this? They can't just reinstate old settled charges on a Company just because they bought another Company and are greedy.
 
Originally posted by: Bryophyte
Was the license transferrable?
Click to expand...

It was transferred. Instead of paying a "new license" activation fee Company A was required to purchase a support contract. This year they didn't purchase a support contract and the new owner(s) of Company B want the new license activation fee + other fees from before the Company went bankrupt.
 
Pardon my ignorance of bankruptcy, but how could company A buy another company and not assume any of its debt?
 
Originally posted by: MrChad
Pardon my ignorance of bankruptcy, but how could company A buy another company and not assume any of its debt?
Click to expand...

The only debt that had to be paid was 400k to a power company. Other than that no debt was assumed. Creditors were handled by the bankruptcy cour.t
 
I think that part of the legal proceedings includes giving a chance for people who are owed money by the first company to come forward with claims.
 
Mill, I swear to god I was wondering the same thing when I was driving home today! No specific reason though :roll:

you know what I mean....
 
Originally posted by: Mill
Originally posted by: Bryophyte
Was the license transferrable?
Click to expand...

It was transferred. Instead of paying a "new license" activation fee Company A was required to purchase a support contract. This year they didn't purchase a support contract and the new owner(s) of Company B want the new license activation fee + other fees from before the Company went bankrupt.
Click to expand...
So if paying support was the alternative and A stopped paying support, they changed the deal first.

No way to tell what's legal without having all the agreements to look at, not to mention that I have no legal training 🙂
 
If use of the software is contingent on maintaining a support contract, then I'm not sure they were legally using the software at the time that they pulled the plug.
 
Originally posted by: Bryophyte
If use of the software is contingent on maintaining a support contract, then I'm not sure they were legally using the software at the time that they pulled the plug.
Click to expand...

But then the company said that they could be paid HOURLY for support and then a support contract wouldn't necessary.
 
Originally posted by: Bryophyte
I think that part of the legal proceedings includes giving a chance for people who are owed money by the first company to come forward with claims.
Click to expand...

They could have. The orginal owners of the business were bondholders and cities.... the new company didn't assume that debt.
 
Originally posted by: Mill
Originally posted by: Bryophyte
I think that part of the legal proceedings includes giving a chance for people who are owed money by the first company to come forward with claims.
Click to expand...

They could have. The orginal owners of the business were bondholders and cities.... the new company didn't assume that debt.
Click to expand...

What I meant was that the company who pulled the plug doesn't seem to have made claims in the correct venue.
 
Originally posted by: Mill
Originally posted by: Bryophyte
If use of the software is contingent on maintaining a support contract, then I'm not sure they were legally using the software at the time that they pulled the plug.
Click to expand...

But then the company said that they could be paid HOURLY for support and then a support contract wouldn't necessary.
Click to expand...

Sounds like a bunch of bullshit then. Wonder if they can be held responsible for damages?
 
Here's an interesting article on software licenses and bankruptcy

This paragraph in particular is interesting:

Having found the software license agreement was an executory contract, the Court now had to determine if Sunterra could assume the agreement. This was a true reorganization, rather than a sale of assets, so there was no need for Sunterra to assign the license agreement to a third party. The court decided that a non-exclusive software license is governed by the same principles as govern a non-exclusive patent license, i.e., that the licensor must affirmatively consent to the transfer of the license to a third-party. The court looked to the assignment clause in the license, which permitted the assignment of the license to a successor in interest that acquired substantially all of the assets of the debtor. However, the court then distinguished an assignment from an assumption. While the licensor might have assented to an assignment, it had not assented to an assumption. Accordingly, the debtor did not have the licensor's assent to the assumption and the debtor's motion was denied.
Click to expand...

Does this same logic apply to the situation you're describing? If so, Company A could not assume the failed company's license without the consent of Company B.
 
Originally posted by: Bryophyte
Originally posted by: Mill
Originally posted by: Bryophyte
I think that part of the legal proceedings includes giving a chance for people who are owed money by the first company to come forward with claims.
Click to expand...

They could have. The orginal owners of the business were bondholders and cities.... the new company didn't assume that debt.
Click to expand...

What I meant was that the company who pulled the plug doesn't seem to have made claims in the correct venue.
Click to expand...

That's the thing. When the Software company was bought out they tried to get money from any source they could.
 
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