Psystar promises bankruptcy court it will rethink its business plan

It isn't Psystar's legal tangle with Apple Inc. that led to its Chapter 11 bankruptcy filing in a Florida federal court last Thursday. Rather, seven of the independent PC maker's top 10 creditors were credit card processing services, making up about 44% of its outstanding debt to those top 10 creditors. The IRS accounted for less than 5% of that debt. This according to court documents obtained by Betanews from the US Bankruptcy Court for Southern Florida.

Although Psystar also didn't blame Apple in its petition for an emergency relief hearing the following day, it did mention the company as the developer of the operating system on which its Open-brand PCs are based. Instead, the story Psystar told is one that could apply to a thousand independent PC makers across the country, except for one important element: It's almost impossible for an OEM of Psystar's size to compete in the PC market on price alone, while still maintaining profitability.

So it took a shot at developing a PC that could command a respectable premium -- something that distinguished it from its competition, enabling it to increase its margins. But in this market and this economy, the gamble hasn't paid off.

"Debtor [Psystar] sales have been greatly affected by the decrease in consumer spending. The financial crisis has also caused creditors to tighten up their terms and become more demanding for immediate payment," last Thursday's petition reads. "Debtor's vendors due to their own financial problems are not being able to supply all necessary items to allow Debtor to produce their product, thus, forcing Debtor to pay higher prices for parts in order to fulfill customer orders in a timely manner and to assure satisfaction with the product. These factors seriously contribute to the Debtor not being able to turn a significant profit in each sale."

Psystar's profits were "diminutive" during the bad economy, it goes on, with the hopes of a turnaround on the horizon. That hasn't happened, and while the company now seeks time and space to make a fresh start of things, its plan so far is to build again around its "valuable intellectual property" -- no doubt a reference to its ability to produce Mac work-alikes.

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