Another twist has emerged in the fascinating saga of Beyond Oblivion, the start-up that tried to bundle all the music in the world along with the purchase of your next smartphone, in a more open way than any other company had to date. (For example, you would have been able to port all of your music and preferences into an iOS or Android app even if you didn’t want to stick with your old phone.)
A team including Adam Kidron (the former CEO of the bankrupt company) and James Heindlmeyer (its former CFO) outbid Nassau Music LLC to purchase the assets of Beyond Oblivion after they went on sale on March 20.
Gee Beyond bid at least $2.57 million (updated), according to the legal news site Law360, for Beyond Oblivion, which burned through over $33 million before imploding and firing around 75 employees over the winter holidays.
However, it’s not time to break out the champagne just yet.
Intertrust Technologies Corp., a major investor in Beyond Oblivion, which also provided DRM technology to it, filed an Objection to the sale on Thursday, citing “the failure of buyer to demonstrate adequate assurance of future performance of the contracts,” as noted by Law360, which posted a .pdf of the Objection. In other words, Intertrust — as well as two other DRM providers, Seacert Corp. and Marlin Trust Management Organization LLC — want to declare Beyond’s contracts to use their DRM technology, which enabled music sharing within the would-be service, invalid.
That spells big trouble for Gee Beyond, according to a source close to the situation who claims Intertrust’s DRM software might almost be considered part of Beyond Oblivion’s DNA, being built into the fabric of the never-launched service. If that is the case, Gee Beyond could face serious challenges if Intertrust and the other DRM providers prevail in their attempt to pull their technologies from the product.
The Objection also reveals that Intertrust and the other DRM providers don’t trust Kidron and Heindlmeyer to succeed where they failed before.
According to the filing,
“The only thing objectors really know about Buyer is that it has partnered with members of Debtor’s current or former management team (including Adam Kidron and James Heindlmeyer), who were in positions of responsibility with Debtor during its financial collapse. The unfortunate reality is that debtor and its management spent millions of dollars in equity financing but were ultimately unable to bring a product or service to market (while competitors were doing so and becoming well-known), even with the assistance of a technical and engineering team, many of whom have refused to be associated with Mr. Kidron’s new venture.”
According to Law360, a hearing was scheduled for Monday on the proposed sale, so we hope to have an update soon.
Ideally, from Gee Beyond’s perspective, the court will rule that it can take Intertrust’s and the others’ DRM technology with them, along with the firm’s other assets. Otherwise, this once-promising start-up could remain confined to “the waters of oblivion,” in the words of Bob Dylan.