Star Citizen - Chris Roberts, lots of spaceship porn, lots of promises

[Telefrog]

Thanks for offering some clarification and opinion @Derek_Smart_3000AD!

[dsmart]

Thank you for the informative commentary, Derek!

You’re welcome. I’m the Star Citizen whisperer. :)

And in case anyone was wondering how I got involved in this farce. It started out when I dared to question the project.

[dsmart]

Yeah okay. That makes more sense, though even then I’m having a hard time envisioning office equipment and computers valued (used) in the multiple millions. But I haven’t seen their offices either. And I’m assuming they don’t own any real estate either, and are likely just leasing. Anyway, I was just trying to see this from the bank’s perspective. Thanks for the input.

It’s a huge office. The largest of the 5 (!) studios. Chris, having raised free money from backers, built it for his brother Erin.

According to their 2016 filing, the office is leased, and has about 4 years left on the lease.

ps: my Final Countdown blog contains images of the pages showing the assets secured.

[Giles_Habibula]

I’m the Star Citizen whisperer. :)

I don’t know if “whisperer” is the right word, but otherwise, yes you are. ;)

[dsmart]

I don’t know if “whisperer” is the right word, but otherwise, yes you are. ;)

Fine. Foghorn then. :)

[Canuck]

as well as their cash out which they took in 2015 by buying themselves out of the company with backer money.

I didn’t know about this. Who cashed out and who has controlling interest in the company now? Does Roberts have actual financial incentive to make sure the game succeeds or has he ‘already gotten his’?

[Giles_Habibula]

[quote=“Derek_Smart_3000AD, post:3909, topic:74635”]
Fine. Foghorn then. :)
[/quote]

[Ryan_Kelly]

There’s only one place in which “excluded collateral” is defined, but there are numerous references in the document to “game” and “game assets” as part of the collateral. If the assets for Squadron 42 and Star Citizen are shared, it seems to me like they’re part of the collateral, which, as far as Star Citizen goes, leaves only the IP rights.

There are game assets which are not shared between Squadron 42 and Star Citizen, but the term “Game” is unfortunately not defined in the Charge that was made public.

It doesn’t make any sense to have such a clause if the Game (which we assume is Squadron 42) isn’t now effectively owned by the bank, does it?

I took this part of your post…

I’m not sure if that’s the correct assumption, but since the document mentions sublicensing the game to CIG while the loan agreement applies (which means the license is at least temporarily assigned to the bank), it seems to be the proper interpretation.

… to mean that you think the sublicensing clause implies that the bank owns the rights to the game Star Citizen.

[rhamorim]

I meant that the sublicensing clause applies to the Game as defined in the agreement, the definition of which is unfortunately not clear in the public document. Because of the limited info I have on the architecture of their code and all, I’m inclined to think that even if it applies mostly to Squadron 42, the terms are wide enough to affect Star Citizen. I may be wrong, of course, but my point about the loan from the start is that it’s weird. :)

[Desslock]

I believe he is referring to the company giving a fixed and floating charge on ALL its assets, in exchange for a loan against a tax credit.

Is there a fixed charge on all assets, in addition to a (standard) general security interest floating charge? If so, that would be extremely unusual and a terrible sign for the company - agree.

If it’s just a GSA and have given specific security on a known receivable (tax credits) that would be a lot less dire. Government sponsored tax credits for R&D are used as assets you can borrow against, for a coupon.

[Desslock]

Also note that it’s not just the software. They attached every asset owned by the company.

Completely normal and mandatory, in the case of any bank loan.

This is also the reason why the bank did this blanket “floating” charge

No, it’s not. Floating charge is standard security, as it doesn’t prevent assets from being used in the ordinary course.

If the company becomes insolvent, the execs get to walk away and leave the bank holding the bag.

That (limited liability) is what a “corporation” does and the main purpose of the entity - limited liability business through a distinct entity. The executives would still be liable for fraud and certain other statutory liabilities, which you can’t get out of (although you can insure, other than fraud), such as employee wages (in the UK/Canada), environmental liability, AND (importantly)any payments made while insolvent that are inappropriate preferences to creditors lacking secured interests/priority or any conveyances of assets during that time.

[dsmart]

I didn’t know about this. Who cashed out and who has controlling interest in the company now? Does Roberts have actual financial incentive to make sure the game succeeds or has he ‘already gotten his’?

See the 10/08/2015 filing on this page.

• Backers pledge money to company
• Company CEO builds office for his brother
• Office gives brother shares
• Project gets windfall from backer money
• Execs sell shares back to company for cash (from backers), thus taking wealth out of the company

It’s genius. And not illegal. The only time it will come back to bit them is if they get sued, or the State or Fed officials got involved because they basically took money from backers to build a product, didn’t deliver on it, but instead lined their pockets. See Lily drone fiasco

[dsmart]

I meant that the sublicensing clause applies to the Game as defined in the agreement, the definition of which is unfortunately not clear in the public document. Because of the limited info I have on the architecture of their code and all, I’m inclined to think that even if it applies mostly to Squadron 42, the terms are wide enough to affect Star Citizen. I may be wrong, of course, but my point about the loan from the start is that it’s weird. :)

You are correct. Plus, we already know that “Game” refers to Squadron 42. Unfortunately for CIG/F42, if this ends up in dispute, it will be easy to prove that the security encompasses any/all tangible SQ42 assets which are shared with Star Citizen. If you read the filing, and compare the definition of “Game” as well as the list of security, to the definition for “Star Citizen”, it is easy to see that it’s excluded in name only.

[dsmart]

Is there a fixed charge on all assets, in addition to a (standard) general security interest floating charge? If so, that would be extremely unusual and a terrible sign for the company - agree.

Yes. It’s right there on page 1.

Persons entitled
Coutts & Co.
Brief description
Contains fixed charge.
Contains floating charge.
Floating charge covers all the property or undertaking of the company.
Contains negative pledge.

[Desslock]

Problem is, the Star Citizen & Squadron 42 IP are so tainted with …[snip] the $153m+ “delivery” liability now attached to it, that nobody would buy it.

This is also not true. If the company went bankrupt and its assets were distributed to creditors, those new owners would be free to sell the assets to anyone without restriction or obligation. There is no “delivery” or “performance” liability to a bona fide third party purchaser for value.

Agree the software would have very little value, however.

[dsmart]

No, it’s not. Floating charge is standard security, as it doesn’t prevent assets from being used in the ordinary course.

That’s why they have both a fixed and floating chart. You really should read the filing; it will help prevent this back and forth :)

[tomchick]

Welcome back, @Derek_Smart_3000AD. It makes me happy when you show up! :)

As for @Timex and @Ryan_Kelly being supportive of Star Citizen, it seems to me they’ve decided to focus on hoping something succeeds rather than expecting it will fail. I appreciate their lack of cynicism, especially because they’re not just doing it blindly. As one of my theology professors used to say, “I’d rather believe in God and be wrong than not believe in God and be right”.

-Tom

[dsmart]

This is also not true. If the company went bankrupt and its assets were distributed to creditors, those new owners would be free to sell the assets to anyone without restriction or obligation. There is no “delivery” or “performance” liability to a bona fide third party purchaser for value.

Which part are you disputing exactly? I wasn’t stating anything that you are implying. I was strictly speaking to the fact that they would be unable to sell the IP for the reasons that I stated. I wasn’t saying they wouldn’t be able to try to sell it.

[dsmart]

Welcome back, @Derek_Smart_3000AD. It makes me happy when you show up! :)

As for @Timex and @Ryan_Kelly being supportive of Star Citizen, it seems to me they’ve decided to focus on hoping something succeeds rather than expecting it will fail. I appreciate their lack of cynicism, especially because they’re not just doing it blindly. As one of my theology professors used to say, “I’d rather believe in God and be wrong than not believe in God and be right”.

-Tom

heh thanks. I pop in once in awhile, and usually just lurk. Mostly when my name shows up on Google Alert when someone comes up with a new and inventive way of invoking/insulting me because for some reason I’m somehow responsible for the train wreck that is Star Citizen.

[Desslock]

Which part are you disputing exactly? I wasn’t stating anything that you are implying. I was strictly speaking to the fact that they would be unable to sell the IP for the reasons that I stated. I wasn’t saying they wouldn’t be able to try to sell it.

Your “delivery” liability line. I thought you were suggesting that a purchaser would have to fulfill some delivery obligation of the borrower, which naturally wouldn’t be the case.