The Crazy 2012s Continue: Funimation Sues ADV & Sentai

Topic started by sickVisionz on Jan. 13, 2012. Last post by Halberdierv2 2 years, 7 months ago.
Post by sickVisionz (4,256 posts) See mini bio Level 24
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Barely two weeks into the year and 2012 is shaping up to be an infamous time for the US anime industry. First off, Bandai shut down it's American anime distribution and licensing company. Next, Media Blaster laid off more than 50% of its employees and the latest news? Funimation is suing ADV and Sentai to the tune of $8 million.

Taken from ANN

Funimation's lawsuit alleges that it became a creditor of A.D. Vision (ADV) in regard to a debt ADV owed ARM Corporation, which was a third party licensing entity jointly owned by Sojitz Corporation and several other companies. The lawsuit notes that ADV had purchased anime licenses from ARM after May 2006, and in January 2008 ARM "declared ADV to be in default of the parties' agreements." ADV lost the rights to more than 30 anime properties, and in July 2008, Funimation and ARM announced that they had reached a distribution agreement for those properties.
In the lawsuit, Funimation claims that ARM also gave Funimation the right to enforce ARM's agreement with ADV, specifically in regard to the debt that ADV owed ARM — making Funimation a creditor. The suit alleges that ADV never paid this debt, and instead sold its assets for below market price to several companies owned by former ADVexecutives and shut down.
The suit goes on to claim that ADV's transfer of assets "was made with the intent to defer, hinder or defraud the creditors of ADV," including Funimation, and that the new companies "succeeded ADV's contractual liability" in regard to the outstanding debt.

So, the basic timeline from Funimation's perspective is this:

  1. ADV licenses 30 anime properties from through a company called ARM.
  2. ADV defaults on these payments
  3. Funimation buys the rights to series and the right to collect ARM's debt from ADV
  4. Former executives of ADV start up new companies
  5. ADV sells the 30 series in question to these newly formed companies
  6. ADV shuts down their company due to insolvency and doesn't pay back any of its creditors, including Funimation.

Funimation lawsuit is hinged upon three things: 1) ADV didn't have the right to sell these series in the first place 2) that these new companies (including Sentai) essentially took on the debt of the of the original owner (ADV) when they purchased them and 3) ADV sold them to avoid paying back creditors.

Sentai and the other companies named in the suit have put forth a countersuit saying that Funimation's lawsuit is without merit, they have no legal financial obligation to Funimation, and that the statue of limitations has already passed on the issues Funimation is suing over.

To put the $8 million into perspective, Funimation, the market share leader in the US anime industry, posted a 2010 pre-tax income (the last year this information was required to be publicly released) of $10.2 million dollars (source). An $8 million hit would have a devastating effect on Sentai to say the least. The first pre-trial meeting is scheduled for October 5th, 2012 so we'll have to wait until then.

Update 1... updated the numbered list

Update 2... added information about the countersuit

Post by MrXD (643 posts) See mini bio Level 15

Wow, just wow. This has been the worst way to start 2012... :/

Post by Dream (7,418 posts) See mini bio Level 20
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First Bandai goes belly up with video distribution and now this? In the worst case scenario, we could potentially lose another major anime distributor. 2012's been an ugly start for the American anime industry.
Post by AgentJ (1,545 posts) See mini bio Level 13

As if this industry wasn't having a hard enough time... Funimation, you do great dubs, but I hope this lawsuit is both merited and worthwhile for your sake...

Especially since Sentai is one of the few remaining localization companies willing to take a few risks.

Post by Bigheart711 (3,783 posts) See mini bio Level 21

This is part of the craziest shit that the US anime industry's been in and it hasn't been a full month yet. Hopefully things will turn out okay. :(

Post by Halberdierv2 (1,290 posts) See mini bio Level 17

i am wondering what's going on. i hope nothing happens to Viz at least.

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