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A federal bankruptcy judge ordered commercial real estate news and events company Bisnow to return approximately $200,000 following allegations real estate data firm Xceligent improperly paid it while locked in a copyright infringement lawsuit, according to an exclusive CoStar report.
Chief Judge Christopher S. Sontchi entered a default judgment for $199,639.39 against Bisnow on May 3 and formally closed the case last week when the firm did not contest the lawsuit seeking repayment of potentially fraudulent payments. Mark Bonner, Bisnow’s Vice President of Content and the company’s top news service editor, declined CoStar’s request for comment.
The long-running Chapter 7 case in U.S. Bankruptcy Court called for the District of Delaware to liquidate Xceligent. The firm collapsed in late 2017 following year-long litigation against CoStar Group. A Kansas City, MO federal judge ordered the firm to pay $500 million for massive copyright infringement of CoStar Group’s photos. The suit also alleged misappropriation of CoStar’s data.
An alleged, ill-fated PR push
Xceligent CEO Doug Curry was let go a few weeks prior to the company declaring bankruptcy, CoStar reports. Before his removal however, a trustee in the bankruptcy case filed a claim that alleged Curry and his wife started a public relations campaign. According to the suit, Curry and his wife, Erin had Xceligent pay online business publication Bisnow $85,000 a month to publish positive coverage of the company and its litigation efforts.
Bisnow allegedly collected approximately $200,000 after Curry was relieved of his duties and Xceligent’s bankruptcy.
“An email from Doug to Erin and an Xceligent Marketing Director shows that Doug was considering signing a $500,000 contract with Bisnow,” the lawsuit said.
What Curry or Xceligent received for its payments is unknown. Bisnow covered the legal battle and published a pair of “Exclusives” The first, before the alleged payments, explained Xceligent’s countersuit against CoStar’s claims. The second came after Curry’s dismissal and covered his plans to start over and build a real estate data company that would compete with CoStar.
According to legal filings, Xceligent trustee Alfred T. Giuliano called Bisnow’s invoices, “reckless spending” by the Curry’s that breached their, “fiduciary duties and deepened Xceligent’s insolvency, as demonstrated by the company failing spectacularly shortly after the Currys’ firing on or about October 24, 2017,” CoStar reports.
Giuliano filed suit against Bisnow to return Xceligent’s payments in December 2019 with January 16 deadline to respond. Bisnow did not respond, putting the firm in default, per court documents. The trustee is now in a position to enforce the judgment and go after Bisnow’s bank accounts and assets to collect, according to Stark & Stark bankruptcy attorney Joseph Lemkin.
“Bisnow can try to vacate the default judgment,” Lemkin told CoStar. “Bisnow would need to show good cause and that the neglect was excusable in terms of not appearing in the case.”
Joe Dyton can be reached at [email protected].
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