CNB claims publisher acquired $15m loan with false representations
CNB [City National Bank] has accused Konami and Autumn Games of defrauding it over loans worth $14m that was used to pay for the development of rap-themed karaoke game Def Jam Rapstar, according to Courthouse News Service.
CNB contests that both Konami and Autumn Games lied in order to secure the loans, promising that sales of Def Jam Rapstar would cover them. The bank claims that it has still not received any payment from the loans.
The complaint from the bank states, “CNB has recently learned that defendants’ representations concerning financial conditions and repayment of the loan – both before and after the loan was approved – were false at the time they were made and that defendants never had any intention of repaying the loan as promised.
“Rather than paying game-related proceeds directly to CNB as agreed, defendants have kept all game-related proceeds for themselves and have refused to remit any such proceeds to CNB.”
The bank also stated that both Konami and Autumn presented “baseless and unrealistic projections” that Def Jam Rapstar would ship as many as 2.5 million copies in its first year of sale. The bank additionally claimed that Autumn had committed that a $1m advance from Konami would be used to pay the loan but never did and instead spent the money elsewhere.
The complaint continues, “By the time CNB learned the true state of affairs, Autumn had drawn down $13,987,003.15 of the $15m line of credit. To date, defendants still have not paid CNB a single penny of the principal amount that is due, and they continue to insist that none of the proceeds from sales of the game are owed to CNB and/or available for repayment.”
CNB now seeks more than $8.9m for fraud, negligent misrepresentation, breach of contract, breach of covenant of good faith and fair dealing, money had and received, unjust enrichment, recovery of personal property and punitive damages.
Follow Marcus on Twitter: @M_M_DH