3DFX creditors still fighting Nvidia 13 years later.

[Nelly]

Found a document just out of chance, while I was looking at acquisitions by motherboard companies, I found this on 3DFX / Nvidia.

I thought it was an interesting read, so thought I would share it with you lot.

The quote below is from the initial petition to claim $100 million in damages from Nvidia.

From what I can gather from the appeal is, the 3DFX creditors wanted an extra $30 million, because the aquistion figure was $70 million, and they claim it should have been around $108 million.

May 2008 >> http://www.law360.com/articles/55100/nvidia-cleared-in-3dfx-bankruptcy-trial

November 2014 (lost appeal) >> http://law.justia.com/cases/federal/appellate-courts/ca9/11-15189/11-15189-2014-11-06.html

Nvidia Cleared In 3dfx Bankruptcy Trial

A U.S. trustee's lawsuit against Nvidia Corp. over the company's 2001 acquisition of assets from its former competitor, 3dfx Interactive Inc., was dismissed by the federal bankruptcy court, Nvidia disclosed on Friday.
Nvidia said the U.S. Bankruptcy Court for the Northern District of California had rejected a petition by William A. Brandt, the Chapter 11 trustee of 3dfx, to obtain more than $100 million in damages from Nvidia.

Nvidia acquired 3dfx Interactive, which makes the popular Voodoo graphics card for video games, for $70 million in 2001. But Nvidia has argued that it overpaid for 3dfx’s assets, which it claims were actually valued at about $14 million.

The creditors of 3dfx, a San Jose, Calif. chip maker that went bankrupt in October 2002, claimed that Nvidia, a Santa Clara, Calif.-based graphics chip company, owed them one million Nvidia shares. They claimed that Nvidia had agreed to the stock transaction in a 2001 merger contract as long as 3dfx met certain financial stipulations.

The case centers on what Nvidia received when it purchased 3dfx. Nvidia took over 3dfx as it was winding down its business and employed 100 of the 120 engineers at 3dfx.

The trustee claimed that Nvidia had not paid the fair value for the assets it had acquired in the transaction, thus causing the bankruptcy of 3dfx and harming its creditors.

But the court found that the “Trustee's valuation theory – every way it is articulated – is simply not credible,” ruling that 3dfx's creditors had not been at all damaged by the merger.

“A trial was necessary to fully demonstrate that we conducted ourselves appropriately in the acquisition and we are very pleased with the decision from the court,” said Nvidia's senior vice president and general counsel, David Shannon. “The decision is comprehensive, thorough, well-reasoned and a complete rejection of the trustee's legal and factual arguments.”

The trial began in March 2007. Though the case was to remain private at first, the bankruptcy judge quickly withdrew an order requiring members of the press to sign confidentiality agreements to attend trial hearings.

Nvidia’s attorneys had called for a closed trial because documents in the case dealt with trade secrets. They pointed out that the trustee had been operating with sealed documents and protective orders for the past four years.

But the judge discussed the matter with the parties of the case and then decided that reporters could attend the trial without signing confidentiality statements. The judge said that each day he would determine which documents in the case were confidential and that if confidential documents were presented during testimony, he would ask the press to leave for that period of time.

 

[Kaapstad]

GTX 970 class action claimers take note lol.

 

[Nelly]

GTX 970 class action claimers take note lol.

Lol. There's quite a few more cases against them here >> http://companyprofiles.justia.com/company/nvidia/dockets/federal-appellate-decision

 

[Orangey]

Considering they are using the patents to grub potentially billions, I think they can afford to pay what's owed.

 

[layte]

Considering they are using the patents to grub potentially billions, I think they can afford to pay what's owed.

They did.

 

[shadow_boxer]

So was this a case of 3dFX basically asking for more money once their acquisition/sale had been agreed?

 

[Rroff]

So was this a case of 3dFX basically asking for more money once their acquisition/sale had been agreed?

Basically there was a multi part payment agreement with different conditions for different levels of payment - nVidia is claiming 3dfx over represented the value of certain aspects and so don't qualify for the full possible payout terms, 3dfx creditors claim they did qualify.

Given that the company was basically failing its likely its value was over stated.

 

[bru]

Considering they are using the patents to grub potentially billions, I think they can afford to pay what's owed.

The trustee claimed that Nvidia had not paid the fair value for the assets it had acquired in the transaction, thus causing the bankruptcy of 3dfx and harming its creditors.

But the court found that the “Trustee's valuation theory – every way it is articulated – is simply not credible,” ruling that 3dfx's creditors had not been at all damaged by the merger.

Or if you read it correctly, the point of view of the trustee, saying they hadn't been paid enough money, was turn down by the court. Being said to be not credible how ever it was articulated, just make the trustee sound like a bit of a money grabber.