DatabaseUSA and its founder Vinod Gupta suffered a double loss in the U.S. Court of Appeals for the Eighth Circuit in April -- Gupta was ordered to pay $10.2 million in a breach-of-agreement judgment, and DatabaseUSA was told to hand over $11.2 million for copyright infringement.
Gupta paid the personal judgment in May. But the DatabaseUSA payment remains in limbo, thanks to the Chapter 11 bankruptcy filing made by DatabaseUSA in January 2019.
The bankruptcy case is complicated as such things go, and may take time to resolve, judging by a partial reading of documents on file with the U.S. Bankruptcy Court for the District of Nevada.
In a filing in March 2019, Infogroup claimed acknowledgement by Gupta and company that there were “two purposes for this bankruptcy” -- one being “to prevent Infogroup from executing on a judgment, pending appeal, without posting bond.”
The second was to assert that “Debtor is judgment proof by reason of insider liens,” in the event of a loss on appeal, the company added.
In schedules filed last year, DatabaseUSA claimed to owe a $34.4 million secured debt to its 90.13% owner Everest Group LLC, according to Infogroup.
Gupta controls “both Debtor and Everest Group LLC,” Infogroup asserted.
In another filing, Infogroup alleged that DatabaseUSA is “one of many affiliated entities controlled by Vinod Gupta,” adding: “Confusion and mystery surround the interrelationships of such entities.”
Attorneys for DatabaseUSA had not responded to a request for comment at deadline.
An Infogroup spokesperson earlier said it would not comment on the litigation or collection.
In a filing, DatabaseUSA described itself in a filing as “a leading provider of full-service database and e-mail marketing solutions providing detailed information on over 15 million businesses and over 245 million consumers.”
The company said its annual gross revenue had grown from over $1.6 million in its first year to over $9.25 million in 2018.
Gupta is the founder of both Infogroup and DatabaseUSA.
Formed after he left Infogroup, DatabaseUSA infringed Infogroup’s copyright by copying its database, according to the U.S. District Court for the District of Nevada.
Among the compelling factors was the discovery of Infogroup’s seed names in the DatabaseUSA database.
DatabaseUSA destroyed its database in 2014 after Infogroup won a preliminary injunction against it.
In the interest of full disclosure, this reporter did some work for an Infogroup subsidiary, Edith Roman, a decade ago.