FUNimation Suing Section23

So here’s the short of it. In January 2008 Japanese licensor ARM declared that ADV Films had failed to pay sufficient fees for its acquisition of 30 anime series. In July 2008 ARM transfered the rights to those 30 anime titles to FUNimation. FUNimation claims that ARM also transfered the legal right to collect the debt ADV still owed on those 30 titles. In September 2009 ADV Films formally ceased operations and relaunched as a variety of interconnected companies owned by former ADV executives.

FUNimation has filed suit against the companies affiliated with distributor Sxion 23 (Section23 Films) seeking approximately US $8 million in unpaid royalties plus interest, costs, and legal fees. FUNimation claims that ADV Films’ sale of itself to itself for below market value was specifically done “with the intent to defer, hinder or defraud the creditors of ADV.” The collective companies affiliated with Section23 have filed a countersuit seeking legal fees, claiming that they do not have a contract with FUNimation; FUNimation was not involved in the original licensing agreements between ARM and ADV Films; Section23 and its affiliates did not exist when FUNimation obtained the rights to collect unpaid debt; and a two-year statute of limitations on FUNimation’s ability to collect unpaid debt has already expired.

ADV Films never filed for bankruptcy protection from creditors.

This all sounds to me like Sentai & affiliates concede that FUNimation was granted permission to collect the unpaid debt, but Sentai shouldn’t have to pay it because Sentai & co. changed their company name, and FUNimation waited too long to demand payment. I’m no lawyer, but if just changing your name is enough to get out of paying a debt, we’d be seeing countless people maxing out credit cards then getting a legal name change.

Source: Anime News Network