This is interesting

http://www.bbc.co.uk/news/technology-37762228

Apparently the cash part of the deal has not been honored. Being a fan of John Carmack's work my instinct is to believe the 'Big Corporation' is simply trying not to pay. But objectively speaking surely there must be more to this, i.e. would it not be relatively easy to document whether you sent the money from ZeniMax's point of view considering the sum, wouldn't the money's paper trail or lack of show whether you have paid or not ? Thoughts ?

You would think cases like this would be super simple. However I've been on the (not) receiving end of non-payment issues with similarly large companies (Sadly never for the sums involved here), and it is kind of impressive how far a company can push its accounting to twist things and hide that they haven't actually paid a specific person. (I'm still owed several grand as part of an NDA for not mentioning having any involvement with a company who doesn't want it publicly known that their 'super green, super peaceful' company accidentally bought an arms research firm and let it run for several years.)

Sadly the argument of "This is my bank account, and as you can clearly see, the sum owed has never been deposited into it" is not proof that they've failed to pay, as they can simply fire back with "Well obviously you have another account somewhere..."

You would think cases like this would be super simple. However I've been on the (not) receiving end of non-payment issues with similarly large companies (Sadly never for the sums involved here), and it is kind of impressive how far a company can push its accounting to twist things and hide that they haven't actually paid a specific person. (I'm still owed several grand as part of an NDA for not mentioning having any involvement with a company who doesn't want it publicly known that their 'super green, super peaceful' company accidentally bought an arms research firm and let it run for several years.)

Sadly the argument of "This is my bank account, and as you can clearly see, the sum owed has never been deposited into it" is not proof that they've failed to pay, as they can simply fire back with "Well obviously you have another account somewhere..."

That sounds like a horrible situation Luckless, hope you can get the resolved at some point.

Sadly the argument of "This is my bank account, and as you can clearly see, the sum owed has never been deposited into it" is not proof that they've failed to pay, as they can simply fire back with "Well obviously you have another account somewhere..."

Right from JC's point of view that issue exists, but can ZeniMax just say, "hey look we deposited payment into this account" then inspection of that account would show who the funds have gone to ?

Sadly the argument of "This is my bank account, and as you can clearly see, the sum owed has never been deposited into it" is not proof that they've failed to pay, as they can simply fire back with "Well obviously you have another account somewhere..."

Well, for that reason, all accounts are registered nation-wide (unless you live in Gumbalalulu-Buktu). It is trivial to show that you don't have another account, even more so as the account number would evidently be known to them had they paid you.

Also, that is one of the two reasons (the other being tax) why every payment without exception has a record in the books (on both sides) and a receipt associated with it. If there is a legitimate claim (burden of proof is with you, but the claim per se isn't being disputed, so... forget about that), and they claim they've already settled with you, then they need to prove this (by showing a receipt). Which they would trivially do to end the discussion forever -- if any such receipt existed. So there you go, no receipt, no payment. (Of course, actually getting money that is legitimately yours from someone who isn't willing to pay can be a bit trickier in practice, there's always the possibility that the next thing they'll do is file bankruptcy, but that's a different story. The "you probably have anouther bank account" story is however lame).

Dunno, but maybe you should consider getting a better lawyer...

But objectively speaking surely there must be more to this, i.e. would it not be relatively easy to document whether you sent the money from ZeniMax's point of view considering the sum, wouldn't the money's paper trail or lack of show whether you have paid or not ? Thoughts ?

It's not a case of one side saying "you didn't pay" and the other side saying "yes we did".... the other side is saying that "we don't have to pay... yet, or maybe ever".

Carmack may have broken the contract when he took ID-owned code with him to Oculus (hence the Zenimax VS Oculus case recently)... and if this particular debt interacts with his employment contract, then they might not have to honor the debt any more. That's what they'll be arguing about in court.

But objectively speaking surely there must be more to this, i.e. would it not be relatively easy to document whether you sent the money from ZeniMax's point of view considering the sum, wouldn't the money's paper trail or lack of show whether you have paid or not ? Thoughts ?

It's not a case of one side saying "you didn't pay" and the other side saying "yes we did".... the other side is saying that "we don't have to pay... yet, or maybe ever".

Carmack may have broken the contract when he took ID-owned code with him to Oculus (hence the Zenimax VS Oculus case recently)... and if this particular debt interacts with his employment contract, then they might not have to honor the debt any more. That's what they'll be arguing about in court.

That's an interesting point and maybe the article being pretty brief is why this is not touched on, however there doesn't seem to be anything on why ZeniMax thinks it doesn't need to pay, they're simply saying the claim is "completely without merit". So are there any references to the reasons you say ZeniMax thinks it doesn't need to fulfill it's part of the agreement. Would they simply not of referenced the Oculus case if this indeed was the reason and wouldn't that be a completely separate legal issue anyway ?

how far a company can push its accounting to twist things and hide that they haven't actually paid a specific person

That large of a sum has mandatory government reporting processes. The company would have reported it, the banks involved in sending and in receiving are both required to report it, and the receiving party needs to report it. The paper trail would be easily verified or repudiated.

Carmack may have broken the contract when he took ID-owned code with him to Oculus (hence the Zenimax VS Oculus case recently)... and if this particular debt interacts with his employment contract, then they might not have to honor the debt any more. That's what they'll be arguing about in court.

That's almost certainly why Zenimax was waiting on payment during the trial. It is a pathetic that they tried to get away with not paying what they agreed upon for buying the company almost a decade ago, yet that is unfortunately common in the world.

But now the trial is over, a critical result was that they found Carmack was not personally liable for damages. If Carmack had been found personally liable they might have been able to keep it with a note that said it was the first part of the payment for damages; they wanted $150M and the $22.5M could have been a convenient part of that. But since Carmack was not found personally liable that doesn't work any more.

I don't see Zenimax getting out of it. They bought the company and promised payments. They can't hold the Oculus thing against him because it already went to trial and was resolved. The company has an unpaid debt for something they purchased and agreed by contract to pay.

The whole mess (both the Oculus thing and is dispute) could have been avoided if all of them followed the "everything I need to know I learned in kindergarten" guides: Don't take things that aren't yours.

After skimming over the statement of complaint published by the Dallas Morning News, I'm a bit confused altogether. Once it's about 150M, and once it's about 45M.

Apparently, Mr. Carmack got those 45M as a convertible promissory note in the form an option on ZeniMax shares which will ripen in June, and he wants the shares by Feburary. I don't know if my understanding is correct, but I will assume "ripen" means as much as "expire" in this context, otherwise the whole thing would be complete bollocks (if "ripen" meant you can only get your shares in June, then complaining about it in February already wouldn't make sense).

Meanwhile, there's been another, unrelated lawsuit about Carmack taking code (the rights to which he had sold) over to his new company. OK, whatever.

Now, ZeniMax is not willing to issue new shares, and according to the complaint that is a problem. Why is that a problem? They shouldn't issue new shares to satisfy the claim anyway, it needs to be paid using existing shares (something different would be kinda nonsensical). Plus, unless the company founders were complete iditots and didn't agree on a (non) dilution of equity clause, just issuing some haphazard amount of additional shares to pay a debt like that isn't even possible.

So the option ripens in June, and blah blah. OK, who cares? Suffices to say "I want to convert my note" just once before that, and Carmack apparently did this (it's stated in the complaint). No need to worry about what deadline will or will not be met in June any longer, is there?

But maybe I've not been reading that legalese gibberish correctly...

The whole purchase was $150m. $45m of that was for Carmack.

I don't agree with what you say about the shares - my understanding is that clauses like this are almost always handled by creating new shares and diluting some or all existing stakes. The alternative isn't practical - the shares have to come from somewhere, and who would that be? A current shareholder, who might not even still hold any shares when the options are exercised?

Most likely Zenimax had a clause which made these options conditional on non-compete clauses and other conditions which they will argue have been seen to have been breached in the Oculus case.

I don't know if my understanding is correct, but I will assume "ripen" means as much as "expire" in this context, otherwise the whole thing would be complete bollocks

Convertible shares are quite common in the business world, especially when working with startups.
For investors they offer a great deal. If the company does well they can be 'converted' into regular shares. So if a company skyrockets to success, they get a large piece of the money. However, the the company does not do well but still survives in business, the shares are treated as a loan that is due at the end date. Finally, if the company fails and goes bankrupt, the convertible shares are given high priority during asset liquidation, so the investor will get a relatively large amount back.

When Zenimax bought id, Carmack (a co-founder) was due $45M of the $150M purchase price since Carmack owned about 1/3 of the company. Carmack decided to take a bunch of it in convertible shares. The lawsuit says currently Carmack has convertible notes for $22,559,047.77, or about $22.5M.

The actual lawsuit papers include the text of the convertible note contract, you can read them here if you're interested in the details, pages 11 through 18.

When convertible shares "ripen", it means the payment becomes due "no later than June 23, 2017". He has the option of cashing it out earlier, but Zenimax MUST pay by then. He has chosen to cash it out early, which is his right in the contract.

In the text of the contract it says he can get a specific number of shares, or get the cash equivalent of buying at $45/share, or require the full amount as cash with no interest charged. (It also has provisions for changes in stock value like stock splits and such.)

This is also complicated by Zenimax's recent testimony in the previous case. Carmack owns about 5% of Zenimax, and while on the stand in the case the CEO testified under oath the value of the company was about 2.5 billion dollars, almost double what they said on paper earlier.

The lawsuit even made a crack about that in paragraph 16, with that the price: represents a substantial discount from the valuation that the company’s CEO, Robert Altman, recently swore to under oath. So while he is asking for the $22.5M, he probably could reasonably demand $125M based on the testimony of the first trial, and the judge would have a high chance of granting it; when someone testifies one number to one judge in his favor and testifies a different number to a different judge that is also in his favor, the judges really don't like that. So since he already testified the $2.5B number, Carmack could probably force him to that same valuation in this case.