News

Funimation Sues A.D. Vision, Sentai, Others for US$8 Million

On November 4, 2011, FUNimation Entertainment filed a lawsuit in the district court of Harris County, Texas against John Ledford, as well as companies A.D. Vision, AEsir Holdings, Sxion 23 (A.K.A. Section23 Films), Valkyrie Media Partners, Seraphim Studios, Sentai Filmworks, Sentai Holdings, and Unio Mystica Holdings (A.K.A. Switchblade Pictures) for breach of contract and other claims. Ledford is the CEO and co-founder of A.D. Vision. In the lawsuit, Funimation claims that the defendants owe Funimation "an amount to be proven at trial but currently estimated" to be approximately US$8 million plus interest, costs, and attorneys' fees.

Funimation's lawsuit alleges that it became a creditor of A.D. Vision (ADV) in regard to a debt ADV owed ARM Corporation, which was a third party licensing entity jointly owned by Sojitz Corporation and several other companies. The lawsuit notes that ADV had purchased anime licenses from ARM after May 2006, and in January 2008 ARM "declared ADV to be in default of the parties' agreements." ADV lost the rights to more than 30 anime properties, and in July 2008, Funimation and ARM announced that they had reached a distribution agreement for those properties.

In the lawsuit, Funimation claims that ARM also gave Funimation the right to enforce ARM's agreement with ADV, specifically in regard to the debt that ADV owed ARM — making Funimation a creditor. The suit alleges that ADV never paid this debt, and instead sold its assets for below market price to several companies owned by former ADV executives and shut down.

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 outstanding debt.

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

On December 23, Sentai Filmworks, Seraphim Studios, Sentai Holdings, Valkyrie Media Partners, Unio Mysteica Holdings, AEsir Holdings, and Section23 Films filed a counterclaim disputing these charges. The companies claim, among other things, 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. 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 companies are asking that the court declare that Funimation's contract "is not a valid agreement binding on the Defendants," that the companies owe "no duties or performance of any obligations" to Funimation, and that Funimation pay for the companies' attorney's fees, costs, and expenses.

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

Section23 Films provided ANN with the following statement:

Funimation's lawsuit is completely without merit or basis and we look forward to proving it when we have our day in court.

When asked to comment, Funimation told ANN that its official statement is addressed in the lawsuit.

Thanks to Mikhail Koulikov for his help in researching this article.