The full docket is here directly from the courts website so you can read the files for yourself (this is free) but from what I can ascertain:
Purism (and Todd Weaver as a guarantor) entered into an agreement with a company that as best I can tell is, some sort of loan shark (but legal) operation that will loan companies money upfront but then takes a percentage of the companies daily revenue on a weekly basis. So in this case, Purism sold $432,000 of future receivables (that is, money from customer orders) for $325,000 in upfront cash.
Purism was then expected to pay back that $432,000 increments of 5% of the daily receivables in a weekly payment, which would then be audited and assessed every 30 days, until the money was paid back.
Cloudfund alleged that after making good on payments for 2 months, Purism breached the agreement and blocked Cloudfund’s access to the account where the receivables were going. The remaining balance plus interest was like $355,000 and Cloudfund promptly sued for this. (Side note: Cloudfund sued two days after the alleged breach of contract, which indicates that this isn’t their first rodeo and that this sort of swift legal action is probably part of their MO. That’s why I call them legal loan sharks because a traditional bank doesn’t sue you in Nassau County Supreme Court 48 hours after a missed payment and then immediately push for summary judgment.)
Despite an initial order for summary judgment (it appears that Purism didn’t respond to the summons, despite Todd being personally served with the filings), that order was vacated when Purism finally got a lawyer to answer the complaint, where they disputed some of the facts. As of late January, it appears there has been a settlement between the two parties (signed in October) wherein Purism has agreed to pay back $315,000 in weekly increments of $10,000 a week, which will then officially settle all debts. The case hasn’t been officially dismissed but assuming payments continue to happen, I expect that the judge will eventually dismiss the case.
I’m not a lawyer so I’m not trying to make any legal pronouncements. This is just my interpretation of the documents.
I will say that this appears to be different from the ongoing settlement negations with a creditor that is mentioned in the SEC documents offered as part of the StartEngine fundraising plan. That settlement is for a bridge loan for $592,000 (which is greater than the Cloudfund loan was, even with interest).
In the SEC documents, Purism says that no settlement has been agreed upon in this case but that two of its options are to either a) transfer 853 Librem 5 units to the creditor as payment or b) pay back the $592,000 using 3% of its gross receivables each month or $6,000, whatever is greater. (This is also different from the settlement agreement that was entered into the court records for the Cloudfund case, which is why I believe these are two separate cases but I could be wrong).
Again, I’m doing my best to proffer minimal
opinion (these are the facts as I have been able to interpret them), but it looks to me like Purism was in a cash crunch, took on some bridge loans with potentially onerous terms from entities with varying degrees of litigiousness, and had a hard time paying those loans back. The Cloudfund matter appears to be settled (although Purism will be on the hook until June 2024 for payments), the status of the other bridge loan is unclear.
(These bridge loans are entirely different from the convertible notes Purism has taken on, because a convertible note is a completely different type of debt instrument).
What any of this says about Purism’s ability to make good on refund requests, I don’t know.