Breaking: Burstnet Strategically Defaulted on Leases, Debt Obligations and Data Center Lease - Court

drmike

100% Tier-1 Gogent
Breaking News: Burstnet's recent and sudden move from Dunmore, Pennsylvania, is due to strategic defaults / refusal to pay for leases.  This includes at least FIVE equipment leases.  Four of them are for servers and related components and the fifth is for electric materials for their Dunmore DC buildout.

Burst also appears to have stopped paying their landlord for the subdivided industrial space where the new 35k datacenter was in Dunmore, Pennsylvania.

More coming...  Stay tuned.  

Documents and such to follow.

Download the court action document against Burstnet here:

http://vpsboard.com/files/burstnet_sued_equipment_lease_defaults_2013_14CV1008_susquehanna.pdf

3/24/2014 @ 03:05AM

The above legal filing shows officially to have been filed on 2/18/2014.  The Lackawanna Sheriff's department served Burst with the suit on 3-3-2014 --- roughly 2 weeks before their sudden unannounced move.   The suit was for 5 lines of credit for leasing equipment and default started all the way back in September of 2013, so it wasn't sudden news to Burst or the new leadership.

3/24/2014 @ 03:17AM

Burstnet is / was being evicted from their Dunmore "new" data center aka leased industrial build out of pre-existing space.  Comments on this below at comment # 17: 

--------------------------------------------------------------------------------

Page 8 of the PDF details the defaults.  There appears to be 5 different lines of credit/leases covered in this civil suit.

Lease #1 - default date September 15, 2013, and no payments made since.

Lease #2 - default date September 15, 2013, and no payments made since.

Lease #3 - default date February 24, 2014 (???)

Lease #4 - default date September 15, 2013, and no payments made since.

Contract #5 - default date November 10, 2013,  and no payments made since.

Now realize that Burst did "buyout" of Digiport in Miami, Florida, effective September, 2013.
 
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drmike

100% Tier-1 Gogent
volumeDrive is peanuts compared to this mess.  But yes, big default on piles of stuff and multiple lines of credit for equipment.

Of course, this is early still in situation, so other creditors likely haven't went to the Courts for redress.  Meaning other suits are coming, like from the property owner where the new datacenter is/was.
 

drmike

100% Tier-1 Gogent
I was going to analyze the documents.  60+ pages... but here, I am posting it and everyone else can read along and start on digesting this.

Some big numbers.   2 counts in the claim exceed $300k between owed on gear + legal fees.

There is a number on page 61 (last page) from a "portfolio sale" that contains a 2.1+ million number.
 

drmike

100% Tier-1 Gogent
Trying to attach file.... ho hum...

PDF appended to original top post and here below.
 
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drmike

100% Tier-1 Gogent
Page #1 of the Civil Court filing versus Burstnet for stopping payment on multiple lines of equipment credit.  Filed in Lackawanna County, Pennsylvania, February 2014.


 
 
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drmike

100% Tier-1 Gogent
The claim,   north of $300k owed by Burstnet.

Page 11:

 
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rds100

New Member
Verified Provider
I wonder what kind of equipment was leased there - was it servers, or was it equipment for the DC - like generators, AC units, UPS systems, etc.
 

drmike

100% Tier-1 Gogent
I wonder what kind of equipment was leased there - was it servers, or was it equipment for the DC - like generators, AC units, UPS systems, etc.
The equipment they've defaulted / non payment is varied....  Lots of servers for dedicated...

Page 15, Attachment A = 125 servers - i5-2400, i7-2600, and Q8400's....

36 month lease, $2349.05 /mo with $1 end buyout via SFG Vendor Finance out of Cincinnati, Ohio.

Page 21, same finance company, is a bunch of various server components.  $2,846.32 a month it looks like.  9/2011 signed deal.

Page 31, Univest Capital, 36 month lease, more servers. $1429.98 + tax $1 end buyout.

Page 31, Summit Vendor Finance, more servers - 24 E5620's + 1 E5645.  $1260.12 + tax + $1 end buyout.

Page 48, Union Credit Corporation - FIVE electric parts vendors. 4 phase wiring.  Dated, 11-15-2012 Commencement date.  Monthly payment of $3435.98.   36 month lease.

and there is more in there...
 

rds100

New Member
Verified Provider
So they are really doing the same as VolumeDrive - running with the servers that are not their and the lease has not been paid.

That is stealing the servers from the lease companies.

Unless of course their new owner purchased all that debt and that's how they became the owner.
 
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drmike

100% Tier-1 Gogent
The last batch of money Burst received came from the firm/guy who is now head of Burstnet (as of January 2014).

Burst had money to buy that Digiport firm in Miami in September 2013, but not to pay for leased gear?!?!?!

New ownership is another cloud-buzzword happy guy.   So density of the dedicated and colo clients surely doesn't tickle his pocketbook when he can rack and ghetto stack a heap of services in a shared cluster.

I need to timeline events to make it all somewhat clearer on what has happened here.

Burst didn't wake up 2 weeks ago and figure out they couldn't deal in Pennsylvania any longer.   They've been planning this exodus since at least September.
 

drmike

100% Tier-1 Gogent
Burstnet stiffed the landlord of their new datacenter also.  Lackawanna County Sheriff, who obviously has served papers to Burst before, visited the DC again on 03/10/2014 on behalf of the Landlord, Insite Dunmore and lawsuit / likely eviction action.

Caption: 2013-07316 

INSITE DUNMORE (vs) BURSTNET TECHNOLOGIES

Filed Date: 12/24/2013

Case Type: REAL PROPERTY - LANDLORD/TENAN

Filed Time: 10:44

Judgment: $           .00

Execution Date: 00/00/0000

Judge Assigned:  

Jury Trial?  

Disposed Desc:  

Disposition Date: 00/00/0000 

Litigant Names Type INSITE DUNMORE ONEILL LLC PLAINTIFF BURSTNET TECHNOLOGIES INC DEFENDANT

Events:

12/24/13 COMPLAINT FILED.
03/10/14 ANSWER AND NEW MATTER FILED W/ CERT. OF SER.
03/10/14 SHERIFF'S RETURN: OF SERVICE OF COMPL. DATED 1-13-14 UPON BURSTNET TECHNOLOGIES BY LACKA. CTY.

--------------------------------------------------------------------

Quite clear that Burst.net stopped paying their landlord of the 35k leased industrial space where their new datacenter was housed probably in Q3 or Q4 of 2013.   My money is on, September 2013, when they stopped paying on servers and electrical gear used in the Dunmore DC buildout.

All that rubbish elsewhere with their Customer Management spinning this as sudden oh crapped our pants, out of our control is totally bullcrap.   They planned this and lived it, profited from non payment also.
 

DomainBop

Dormant VPSB Pathogen
UCC filings details and copies of individual filings available here: https://www.corporations.state.pa.us/ucc/soskb/SearchStandardRA9.asp

Shawn (and Sandi)

File Number      Filing Date      Name and Address
2012010903192     01/06/2012 08:00 AM     ARCUS, SHAWN M.  - [individual]
422 Prescott Avenue, Scranton, PA 18510-2314
2013091004513     09/09/2013 08:00 AM     ARCUS, SHAWN  - [individual]
507 Skyline Drive, Clarks Summit, PA 18411
2014011406814     01/14/2014 08:00 AM     ARCUS, SHAWN  - [individual]
507 Skyline Drive South, Clarks Summit, PA 18411
2014020501437     02/05/2014 11:06 AM     ARCUS, SHAWN  - [individual]
422 Prescott  Ave., scranton, PA 18510
2014020501499     02/05/2014 11:14 AM     ARCUS, SHAWN  - [individual]
507  skyline drive s., clarks summit, PA 18411
2014020501627     02/05/2014 11:32 AM     ARCUS, SHAWN  - [individual]
507 SKYLINE DR S, CLARKS SUMMIT, PA 18411
2014020501742     02/05/2014 11:34 AM     ARCUS, SHAWN  - [individual]
507 SKYLINE DR S, CLARKS SUMMIT, PA 18411
2014011406814     01/14/2014 08:00 AM     ARCUS, SANDI  - [individual]
507 Skyline Drive South, Clarks Summit, PA 18411

Burst:

File Number      Filing Date      Name and Address
2012051605048     05/15/2012 08:00 AM     BURSTNET TECHNOLOGIES - [Commercial]
422 Prescott Ave, Scranton, PA 18510
34090184     06/25/2001 10:28 AM     BURSTNET TECHNOLOGIES INC - [Commercial]
1000 S MARKET ST, BLOOMSBURG, PA 17815
34090185     06/25/2001 10:28 AM     BURSTNET TECHNOLOGIES INC - [Commercial]
1000 S MARKET ST, BLOOMSBURG, PA 17815
2009043010165     04/30/2009 08:06 PM     BURSTNET TECHNOLOGIES INC - [Commercial]
422 PRESCOTT AVE, SCRANTON, PA 18510
2009101506662     10/15/2009 08:00 AM     BURSTNET TECHNOLOGIES INC - [Commercial]
422 PRESCOTT AVENUE, Scranton, PA 18510
2009101506674     10/15/2009 08:00 AM     BURSTNET TECHNOLOGIES INC - [Commercial]
422 PRESCOTT AVENUE, Scranton, PA 18510
2014011406814     01/14/2014 08:00 AM     BURSTNET TECHNOLOGIES INC. - [Commercial]
1205 O'NEILL HIGHWAY, Dunmore, PA 18512
2009120904897     12/08/2009 08:00 AM     BURSTNET TECHNOLOGIES, INC - [Commercial]
42 Prescott Ave, Scranton, PA 18510
2010051005307     05/10/2010 01:51 PM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 Prescott Ave, SCRANTON, PA 18510
2010092005483     09/20/2010 08:00 AM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 Prescott Avenue, Scranton, PA 18510
2010102103410     10/21/2010 08:00 AM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 Prescott Avenue, Scranton, PA 18510
2010110502086     11/05/2010 11:26 AM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 PRESCOTT AVE, SCRANTON, PA 18501
2010121500504     12/14/2010 08:00 AM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 Prescott Avenue, Scranton, PA 18510
2010123105192     12/31/2010 04:31 PM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
PO BOX 591, SCRANTON, PA 18501
2011011005440     01/10/2011 04:59 PM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 Prescott Ave, Scranton, PA 18510
2011030701401     03/04/2011 08:00 AM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 Prescott Avenue, Scranton, PA 18510
2011030702605     03/07/2011 11:37 AM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
302 EAST STREET, BLOOMSBURG, PA 17815
2011042502821     04/21/2011 08:00 AM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 Prescott Avenue, Scranton, PA 18510-2314
2011052000879     05/19/2011 08:00 AM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 PRESCOTT AVE, Scanton, PA 18510
2011052503231     05/24/2011 08:00 AM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 PRESCOTT AVE, Scranton, PA 18510
2011060306308     06/02/2011 08:00 AM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 PRESCOTT AVE, Scranton, PA 18510
2011062305346     06/23/2011 07:34 PM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
302 East St, Bloomsburg, PA 17815
2011062705130     06/27/2011 03:05 PM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 Prescott St, Scranton, PA 18510
2011072106132     07/21/2011 04:00 PM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 Prescott Avenue, Scanton, PA 18510
2011072904019     07/29/2011 08:00 AM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 PRESCOTT AVE, Scranton, PA 18510-2314
2011092900926     09/28/2011 08:00 AM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 PRESCOTT AVE, Scranton, PA 18510
2011092900990     09/28/2011 08:00 AM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 Prescott Avenue, Scranton, PA 18510-2314
2011100405698     10/03/2011 08:00 AM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 PRESCOTT AVE., Scranton, PA 18510
2011100406171     10/03/2011 08:00 AM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 PRESCOTT AVE, Scranton, PA 18510
2011100501654     10/03/2011 08:00 AM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 Prescott Avenue, Scranton, PA 18510
2011102601343     10/25/2011 08:00 AM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 PRESCOTT AVE, Scranton, PA 18510
2011103103158     10/31/2011 12:39 PM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 PRESCOTT AVE, Scranton, PA 18510
2011113009578     11/30/2011 08:15 PM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 Prescott Ave, Scranton, PA 18510
2012010903205     01/06/2012 08:00 AM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
P.O. Box 591, Scranton, PA 18501-0591
2012010903217     01/06/2012 08:00 AM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
P.O. Box 591, Scranton, PA 18501-0591
2012030501562     03/02/2012 08:00 AM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 PRESCOTT AVE, Scranton, PA 18510
2012050308427     05/03/2012 06:57 PM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 Prescott Ave, Scranton, PA 18510
2012051405347     05/11/2012 08:00 AM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 Prescott Avenue, Scranton, PA 18510-2314
2012051501531     05/14/2012 08:00 AM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 PRESCOTT AVE, Scranton, PA 18510
2014012106439     01/21/2014 04:15 PM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
1205 ONEILL HWY, DUNMORE, PA 18512
2009102600916     10/26/2009 09:22 AM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
302 EAST STREET, BLOOMSBURG, PA 17815
2009061105827     06/11/2009 02:19 PM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 Prescott Avenue, Scranton, PA 18510
2009070706581     07/02/2009 08:00 AM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 PRESCOTT AVENUE, Scranton, PA 18510
2009073105148     07/31/2009 01:57 PM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
302 EAST ST, BLOOMSBURG, PA 17815
2009082801284     08/27/2009 08:00 AM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 PRESCOTT AVENUE, Scranton, PA 18510
20031116357     11/17/2003 03:37 PM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 PRESCOTT AVENUE, Scranton, PA 18501-8501
2006102403924     10/24/2006 10:49 AM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 PRESCOTT STREET, SCRANTON, PA 18510
2006102403962     10/24/2006 10:50 AM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 PRESCOTT STREET, SCRANTON, PA 18510
2008042804139     04/28/2008 11:41 AM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 Prescott Ave, Scranton, PA 18510
2008071803752     07/18/2008 02:34 PM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 PRESCOTT AVE, SCRANTON, PA 18510
2008080507820     08/05/2008 03:12 PM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 PRESCOTT ST, SCRANTON, PA 18510
2012062907875     06/29/2012 05:49 PM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 Prescott Ave, Scranton, PA 18510
2012070906227     07/09/2012 02:46 PM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 Preston Ave., Scranton, PA 18510
2012080201895     08/01/2012 08:00 AM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 PRESCOTT AVE, Scranton, PA 18510
2012091001933     09/10/2012 11:34 AM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
125 O'Neill Highway, Dunmore, PA 18512
2012092504574     09/21/2012 08:00 AM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 Prescott Avenue, Scranton, PA 18510
2012100500185     10/02/2012 08:00 AM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 Prescott Avenue, Scranton, PA 18510
2012110703822     11/02/2012 08:00 AM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
1205 O'Neil Highway, Dunmore, PA 18512
2012110802125     11/05/2012 08:00 AM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 PRESCOTT AVENUE, Scranton, PA 18510
2012112804638     11/28/2012 02:40 PM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 Prescott Ave, Scranton, PA 18510-2314
2012121101994     12/11/2012 10:05 AM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 Prescott Ave, Scranton, PA 18510
2012122405177     12/24/2012 02:28 PM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 Prescott Ave., Scranton, PA 18510
2012122704347     12/27/2012 12:53 PM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 PRESCOTT AVE., SCRANTON, PA 18510
2012123104409     12/31/2012 02:41 PM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 Prescott Ave., Scranton, PA 18510
2013010701499     01/03/2013 08:00 AM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
8600 HARRY HINES RD, Dallas, TX 75235
2013010906493     01/09/2013 01:18 PM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 Prescott Avenue, Scranton, PA 18510
2013030104637     03/01/2013 02:09 PM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
1205 O'NEILL HWY, DUNMORE, PA 18512
2013032807475     03/28/2013 05:38 PM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
1205 O ' NEILL HWY, DUNMORE, PA 18512
2013040904572     04/09/2013 12:25 PM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 Prescott Avenue, SCRANTON, PA 18510
2013041106278     04/11/2013 05:01 PM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 Prescott Ave., Scranton, PA 18512
2013041703034     04/16/2013 08:00 AM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 PRESCOTT AVE, Scranton, PA 18510
2013042304849     04/23/2013 01:18 PM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 Prescott Avenue, Scranton, PA 18510
2013060403726     06/03/2013 08:00 AM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 Prescott Avenue, Bethon, PA 18964
2013070307495     07/03/2013 04:06 PM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 Prescott Avenue, Scranton, PA 18510
2013070503592     07/05/2013 01:54 PM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 Prescott Ave, SCRANTON, PA 18510
2013071907981     07/19/2013 05:48 PM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 Prescott Avenue, Scranton, PA 18510
2013100107587     09/30/2013 08:00 AM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
1205 O'Neill Highway, Dunmore, PA 18512
2013102805856     10/28/2013 05:37 PM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 PRESCOTT AVE, SCRANTON, PA 18510
2013103104902     10/31/2013 04:05 PM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 Prescott Avenue, Scranton, PA 18510
2013110701969     11/07/2013 10:53 AM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 PRESCOTT AVE, SCRANTON, PA 18510
2013112502123     11/22/2013 08:00 AM     BURSTNET TECHNOLOGIES, INC. - [Commercial]
422 PRESCOTT AVENUE, Scranton, PA 18510

edited to add a TL;DR: lots of debt secured by both Burst and Shawn's personal assets, lots of creditors, potential for several more lawsuits
 
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