April 19, 2008 in Business

BlueRay sued for financial data

By The Spokesman-Review
 

A shareholder in BlueRay Technologies Inc. accuses the Spokane company of not maintaining or turning over records such as financial statements and lists of assets, and says a partial balance sheet provided was off by $4 million.

Yelena Simonyan claims in a lawsuit filed in Spokane County Superior Court that she invested $100,000 in the privately held company, but that BlueRay has not provided full financial records upon request as mandated by state law. Simonyan is asking the court to force BlueRay to offer up the records and pay her costs.

It’s the latest in a string of lawsuits against the company, which hoped to open a plant downtown to manufacture and distribute Blu-ray discs but has been hindered by debt, technical problems and other setbacks. As of a month ago, BlueRay had not started production, and the company earlier this year laid off its small work force.

Attorneys for BlueRay and Simonyan this week obtained a court order to seal the sworn statement of Simonyan’s attorney, Daniel J. Gibbons, of Paine Hamblen LLP, and other court documents to prevent competitors from learning company secrets and The Spokesman-Review from reporting on them.

BlueRay CEO and President Erick Hansen declined comment, and a message for BlueRay attorney Steven Schneider was not returned Friday.

Gibbons declined comment, citing an agreement with BlueRay’s counsel not to speak to the newspaper.

BlueRay still has not obtained a certificate of occupancy for its plant in the partially remodeled Commercial Building, 1119 W. First Ave., according to city records.

It had repaid more than $200,000 to reduce its debt early this year, and planned to rehire workers and seek additional investment, Hansen said last month.

Simonyan’s suit alleges BlueRay has not provided an array of documents Simonyan wanted to “determine if BlueRay’s management was complying with fiduciary duties and to determine whether BlueRay was complying with corporate and legal formalities.”

In response to her requests last fall, Simonyan alleges, BlueRay in December provided an “incomplete balance sheet” dated Oct. 31 that was “out of balance” by more than $4 million and other financial and accounting information, according to court documents.

The balance sheet shows BlueRay owning the Commercial Building as a $4.5 million asset, she alleges. But, Simonyan’s complaint points out, county property records show the structure is owned by Pacific First West LLC. Hansen is the agent for Pacific First West, according to state records.

BlueRay provided to Simonyan account ledgers, balance sheets and corporate minutes and bylaws not publicly available, and they were filed as an affidavit and exhibits, Hansen states in court documents. Those are under seal after Court Commissioner Steven Grovdahl agreed to “make confidential” parts of the record.

A “compelling privacy interest” exists in sealing the records, and “such concerns outweigh the public interest in access to the Court file,” he wrote in a Wednesday order.

Schneider contends the lawsuit contains allegations that will “irreparably harm” BlueRay’s “ability to obtain contracts and market its services, as well as relations with potential and current investors.”

“The potential for irreparable harm is immense,” Schneider states. “We expect that, as soon as the case name is published, the Spokesman-Review will access the file, as has happened in the past, and the information will be published. … A delay in financing or manufacturing because of this will have a great, though as yet undetermined, cost to BlueRay Inc.”

A hearing for BlueRay to show why the court should not force it to reveal the records to Simonyan, is scheduled for April 25.


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