Aimster CEO Declares Bankruptcy

By Robert Menta 3/13/02

Nearly a year after his company filed suit against the Recording Industry Association of America (RIAA), Aimster head Johnny Deep has declared personal bankruptcy.

This is only the latest in a series of tribulations for Deep. Last January, Deep was forced to transfer the domain name to AOL in a trademark dispute. Renaming the file trade program to Madster, Deep decided to focus his legal energies towards the record industry lawsuit.

That suit too has had its share of setbacks with the venue being moved away from Aimster/Madster's local Albany, NY to Chicago, increasing the company's legal costs.

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Deep's personal filing has no direct bearing on the company's bottom line or on its lawsuit with the RIAA. Deep's lawyer, George Carpinello, of Boies Schiller & Flexner LLP did tell the Albany Business Journal that Deep's bankruptcy filing "will result in an automatic stay of any cases he is involved in." The company was to face a preliminary injunction later this month in Chicago. That will most likely be postponed.

While Aimster/Madster's legal team stress that the stay will not undermine their case against the music industry, one has to wonder how long the company will be able to fiscally hold out. As the tactics used in court by its opponent are specifically designed to drain as much money from them as possible, this filing could just be a symptom of a crack ready to burst.

This tactic worked very well against, setting up Vivendi/Universal's acquisition of the weakened company. It has also drained millions from Napster in its suit against the RIAA, a company that has survived only because of a hundred-million-dollar infusion of cash from their partner/legal opponent Bertelsmann AG.

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