Anime & Manga News

FUNimation Sues ADV, Sentai, and Others for US $8 Million

by Florete
Jan 13, 2012 8:41 PM | 107 Comments
According to Anime News Network, FUNimation Entertainment filed a lawsuit in the district court of Harris County, Texas against CEO and co-founder of ADV Films John Ledford, including companies ADV Films, AEsir Holdings, Sxion 23 (Section23 Films), Valkyrie Media Partners, Seraphim Studios, Sentai Filmworks, Sentai Holdings, and Unio Mystica Holdings (Switchblade Pictures) for breach of contract and other claims on November 4, 2011. According to the lawsuit, FUNimation claims that the defendants owe FUNimation "an amount to be proven at trial but currently estimated" at approximately US $8 million.

The lawsuit alleges that FUNimation became a creditor of ADV in regard to a debt owed to ARM corporation by ADV. FUNimation claims that ARM gave them the right to enforce ARM's agreement with ADV in regard to the debt ADV owed ARM, making FUNimation a creditor, and that ADV never paid this debt, instead selling its assets to several companies owned by former ADV executives.

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 debt. FUNimation is requesting that the court declare ADV's transfer of assets "as null, voided and without effect," restoring those assets to the parent company, and is also requesting a jury trial.

On December 23, Sentai Filmworks, Seraphim Studios, Sentai Holdings, Valkyrie Media Partners, Unio Mystica Holdings, AEsir Holdings, and Section23 Films filed a counterclaim disputing these charges, claiming that they do not have a contract with Funimation and are not liable to the company. They claim that the companies did not exist when FUNimation acquired the rights from ARM to enforce ADV's contract with ARM, and in addition, the companies claim that FUNimation's lawsuit was filed after the two-year statute of limitations and that Funimation was not involved with the original contract and cannot claim any direct damages.

The first pre-trial meeting is currently scheduled for October 5, 2012.

Source: ANN

20 of 107 Comments Recent Comments

The people that want the R1 industry gone just so that the fan subs can flourish frustrate me to no end. If in the end neither the R1 industry or fan subs help the Japanese industry, what makes one better than the other? I've always been an advocate of buying R1, because it's not like buying the R1 DVDs are not supporting anyone. Buying the R1 releases help support my favorite licensing companies so I can get more anime dubbed in English. It helps my favorite voice actors get paid so that they can come back & lend their voice to other great shows licensed on down the line. In a round about way it helps the U.S. economy in general. Plus I personally can't get as deeply involved in an anime if I have to read the subtitles. I was crushed when I 1st learned that ADV went down, it was my favorite licensing company & I immediately blamed piracy for that. I still blame piracy for it too, but since then have realized that it's a double edged sword. Most people are not like me & throw their trust into a couple a reviews in order to judge an anime's quality & whether or not to purchase the dvd/blu--ray @ retail. . Most people like to watch some fan subs to see what the anime is like 1st before they make a purchase. So in a way it hurts & helps @ the same time, it's all based on the upon the people that watch the fan subs whether they use them for legitimate reasons or just to be jerks to avoid paying anything. I had to get that off my chest. As for the case between Funimation & the other licensers, I wish they would just work together for the good of the R1 industry & not try to tear each other apart. Funimation seems to me to be in the right, but how much of the 8 million are they actually going to get in the end if there is a lengthy trial? Suit could wind up being detrimental to all involved. My 2 cents is to just play nice & give each other healthy competition so that the real winners become us as the R1 consumers.

Jan 17, 2012 6:07 PM by Kaji02

So the Mayans were right after all......2012, end of R1 industry eh.

Bloody hell that's sad b/c I do like the releases. both companies. Basically bought S&W Season 2 for Funi's dub and Sentai's Anime Network lets me watch s**t on my TV.


If only some immensely rich hobbyist could rescue the industry eh.

Jan 17, 2012 12:00 PM by mstrchef117

The voice actors are gonna be pissed but I would be if I was owed 8 million dollars. Well I think aomone tried to city the paper work in both companies and someone finally let come to day light then bam someone looks like the bad guy and the other the good guy.

Jan 16, 2012 1:33 PM by Setsuna200

It's kind of surprising it's taken this long for someone to take some action over this.

Jan 16, 2012 1:13 AM by Neane93

Redfoxoffire said:
Care to explain why? It's internet streaming/simulcasting just like CR. Why is it okay for CR but not Funico?.


Funimation's policy is "Fuck the rest of the world. USA number 1"

Crunchyroll actually tries to get rights to stream titles to other parts of the world. But sometimes Funimation puts it's ugly mug in between and STOPS any kind of chances for non US people to watch legally some series.

That attitude pisses me off atleast.

That is also why I happily pay the premium fee to Crunchyroll every month. They usually deserve my money for actually caring about other people than the oh so holy Americans.

Jan 15, 2012 12:29 PM by Sir_Lexa

dsister said:
If I ran a company and another company tried to get out of paying me 8 million dollars

But that is exactly what the court/judge is supposed to decide. Contract law is messy, especially with complex bankruptcies passing through multiple hands, so don't assume Funimation is right simply because they say so.

As for Funi hate, they've more than earned it over the years, long before this. This event alone isn't creating the hate from a vacuum.

Jan 15, 2012 12:04 PM by jmal

DraconisMarch said:

dsister said:
I hope Funi wins this. As someone who almost exclusively buys anime DVDs(besides 5 series) due to really really small bandwidth cap. Funimation makes up the majority of my collection. And as long as they keep bringing over enjoyable anime I will keep supporting them. If those companies owe them money then they should get what they deserve
Duh... what? News flash: FUNi isn't the only company making R1 releases. And if you can read, it's very likely that they're just being greedy and trying to monopolize the R1 anime industry.
I know that they aren't the only publisher of anime in R1... And I'm sure Funi just wants to throw away millions of dollars pushing a lawsuit that they know is flimsy... oh wait That's dumb. If I ran a company and another company tried to get out of paying me 8 million dollars you can bet your ass I would try to get it back. I really don't get all the Funi hate on this site T_T

Jan 15, 2012 11:51 AM by dsister

Redfoxoffire said:
supermegasonic said:
anyone care to make a TL;DR version of this??

FUNimation Sues ADV, Sentai, and Others for US $8 Million.

*facepalm* lol i get that part, i meant why though.

Aritha said:
supermegasonic said:
anyone care to make a TL;DR version of this??


#1: Funimation apparently became a creditor of ADV for a debt owed to ARM corp.
#2: Funimation claims that ADV hasn't paid this debt back, instead they've sold assets wiith the intent of fraud to ADV creditors.
#3: Funimation wants those assets transfered as void, in order to restore the funding lost.
#4: ADV counterclaim = there is no contract with ARM corp. between them and Funimation, if this is true and can be proven in court, Funimation's claim will not hold up.

hmm, i see, thx, now i'm beginning to to understand the situation.

Jan 15, 2012 11:20 AM by supermegasonic

Sh!t just got serious. 0.o

Jan 15, 2012 9:54 AM by soulless4now

Oh crap!

Jan 15, 2012 7:45 AM by HyperCobaltMax

supermegasonic said:
anyone care to make a TL;DR version of this??


#1: Funimation apparently became a creditor of ADV for a debt owed to ARM corp.
#2: Funimation claims that ADV hasn't paid this debt back, instead they've sold assets wiith the intent of fraud to ADV creditors.
#3: Funimation wants those assets transfered as void, in order to restore the funding lost.
#4: ADV counterclaim = there is no contract with ARM corp. between them and Funimation, if this is true and can be proven in court, Funimation's claim will not hold up.

Jan 14, 2012 11:52 PM by Prim

kkslider5552000 said:


this should be fun


LOL XDDDD HAHAHAHA

-----------------

What the hell FUNimation? Come on now....I will see if I can be in the court room.

Jan 14, 2012 10:13 PM by Lolicon

Also.
MAL's legion of retarded weabos grows stronger.

I bet you guys think SOPA is all about trying to take away anime from you too.
=3

Jan 14, 2012 9:44 PM by Sabinlerose

Totally being greedy and all.

ADV: Hey wanna buy this car.
Funi:Okay, that would be awesome.
ADV: Thanks for the money. By the way im actually keeping the car and just giving you the engine. Even though the contract clearly states you bought the car and the engine and everything else.
Funi: We done been hoodwinked.
ADV:Fucking sucker. TROLOLOLOLOL.
Funi: -waits for a length of time before responding to it for some stupid and strange reason-

TL/DR version.

Jan 14, 2012 9:41 PM by Sabinlerose

What is it with america and suing?

Jan 14, 2012 9:31 PM by F2P

EmperorH3ctor said:
Sanguis said:
The heck is going on with the American anime industry..? Everything seems to be falling apart all of a sudden.


It's looking that way. :(
I'm even shocked that this is happening 'cause I grew up on Funi and ADV. I've grown to like Sentai despite what the haters say.

*hard facepalm at some comments* I'm glad I passed business law a few months ago (and found myself loving it) because to those of you who are "demonizing"--for lack of a better word--FUNI for filing a lawsuit against the following parties for BREACH OF CONTRACT as stated in the article, let me explains what it means: when one or 2 or more parties are failing or have failed to comply to the terms of any sort in a WRITTEN contract, in general. The one party that feels cheated can sue the other party.

Think of it this way, if you give me your end of the bargain as written in contract and I don't (or fail to), you have the legal right to sue me. And if you have solid evidence to prove that, I lose and you win the case. It's that simple.

Now, all that Funi and the other parties need is solid evidence that prove the claims to be true. Again, written contracts would be the best source of evidence. If not, then Funi loses and Sentai don't have to pay squat. It's not about Funi trying to destroy Sentai (though I hope it doesn't turn out like that) or the competition so please, don't assume it is that just b/c you don't like Funi or simply biased against them. It's just taking legal action that they think is right against the parties not complying with their end of an agreement. This is how business law works! Sentai would've have done the same thing is some other company tried to hustle them. This could happen to any company as well.

On a note, I'm not defending both sides. Just stating the facts of what I've learned and how it may--not WILL--turn out in this situation for both parties given the evidence. If the accused parties did something wrong (or illegal, God forbid), that's their fault, not Funi's.

I hope this clears some misunderstandings and notions of the "big guy picking on the little guy".
Problem is that it doesn't sound like FUNi doesn't have shit for proof, and Sentai and friends actually have a decent defense.

Exkalamity said:
I think more people than you realize already are aware of what you said. From the original news post, I vaguely gather that Funi is largely pulling this accusation out of their ass. Funimation's accusation seems to stand on shakey ground (the whole bit about redistributing the assets with malicious intent and what not. The malicious intent has to be established and proven first,) and ADV's rebuttal seems quite sound. I think most of the readers were able to pull that vibe from the post and thus respond harshly towards Funi.
^^^ Oh someone beat me to it.

Redfoxoffire said:
RyanSaotome said:
Yanoflies said:
Who gives a shit about FUNi.

EDIT:

Why do you guys care anyways? I'd much prefer if no anime made it to the states.
And while this is kinda blunt, I agree. No license holders makes it easier for the fansub industry to thrive.
And all us people who want to actually own the anime we love on DVD/Blu-ray as well as support the creators of it can all just go fuck ourselves, right?
And the people who actually like English dubs...

dsister said:
I hope Funi wins this. As someone who almost exclusively buys anime DVDs(besides 5 series) due to really really small bandwidth cap. Funimation makes up the majority of my collection. And as long as they keep bringing over enjoyable anime I will keep supporting them. If those companies owe them money then they should get what they deserve
Duh... what? News flash: FUNi isn't the only company making R1 releases. And if you can read, it's very likely that they're just being greedy and trying to monopolize the R1 anime industry.

Jan 14, 2012 8:59 PM by DraconisMarch

supermegasonic said:
anyone care to make a TL;DR version of this??

FUNimation Sues ADV, Sentai, and Others for US $8 Million.

Jan 14, 2012 7:54 PM by Florete

Wow, wasn't expecting this...

Jan 14, 2012 7:51 PM by KamiKazen

anyone care to make a TL;DR version of this??

Jan 14, 2012 7:38 PM by supermegasonic

Oh my god.

Jan 14, 2012 7:27 PM by BlueDropED

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