By Ryan C. Wood
Back in January of 2013 I wrote an article about the unfortunate filing of Chapter 7 bankruptcy by Juno Baby, Inc. Juno Baby, Inc. filed for bankruptcy protection under Chapter 7 of the Bankruptcy Code on December 21, 2012, Bankr. Case No. 12-33574. So what is going to happen to Juno Baby, Inc. and its intellectual property?
On February 28, 2013, the Chapter 7 trustee assigned to liquidate the remaining assets of Juno Baby, Inc. filed a motion pursuant to section 721 of the bankruptcy code to operate the business while it is liquidated. Section 721 provides that the court may authorize the trustee to operate the business of the debtor for a limited period, if such operation is in the best interest of the estate and consistent with the orderly liquidation of the estate. No opposition to the trustee’s motion was filed. The Chapter 7 trustee requested approval to run Juno Baby, Inc. given that products of Juno Baby, Inc. were still being sold by Amazon.com. The proceeds from those sales are part of the bankruptcy estate and must be preserved for the benefit of creditors of Juno Baby, Inc.
On October 1, 2013, the Chapter 7 trustee’s Bankruptcy Attorneys filed a motion to sell the intellectual property of Juno Baby, Inc. According to the motion the intellectual property of Juno Baby, Inc. was sold to Super Pig Entertainment, LLC for $22,500. The motion further provides that Super Pig Entertainment, LLC, is a company owned by one of the co-founders of Juno Baby, Inc. At the time of the bankruptcy of Juno Baby, Inc. the co-founders did not own the corporation anymore. The original co-founders sold Juno Baby, Inc. in 2009. On December 6, 2013, the Chapter 7 trustee filed an amended motion to sell the assets of Juno Baby, Inc. to clarify exactly what is being sold to Super Pig and what is not. The amended motion provides in part: “Pursuant to the Amended Sale Agreement, the Purchaser is purchasing all of the assets of the Debtor [Juno Baby, Inc.], including, without limitation, all copyrights, trademarks and other intellectual property, but not including all cash in the Debtor’s bank accounts, all proceeds of sales of the Debtor’s inventory deposited into the Debtor’s bank accounts on or before August 31, 2013, a State Board of Equalization refund in the amount of $13,926 received by the Trustee, and a potential Travelers Insurance Company refund scheduled by the Debtor in Schedule B in the Debtor’s bankruptcy case with an unknown valuation. The sale price for the assets is $22,500 which has been received by the Trustee.”
Juno Baby, Inc.’s bankruptcy schedules list $352,816 in assets and $6,913,903.00 in unsecured debts. Most of the assets are in the form of inventory totaling $331,806.00. So with the addition of the $22,500 in intellectual property funds received and the $13,926 for the BOE, the total available to creditors is approximately $368,232.00 (estimate only based upon court filings). Of course this is not counting the funds received from sales of product on Amazon.com, deducting the Chapter 7 trustee fee, Bankruptcy Attorney fees and accounting fees from the total. Juno Baby, Inc.’s creditors will be lucky if they receive a 5% distribution (5 cents for every dollar owed) from the bankruptcy estate of Juno Baby, Inc. That is also assuming that the inventory of $331,806.00 is even worth that.