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Konami sued over alleged unpaid $14M Def Jam Rapstar loan

Video game Def Jam Rapstar is once again the subject of a lawsuit, as the City National Bank has alleged that publishers Konami and Autumn Games lied to secure a loan for the distribution of the title.
Video game Def Jam Rapstar is once again the subject of a lawsuit, as the City National Bank has alleged that publishers Konami and Autumn Games lied to secure a loan for the distribution of the title. Def Jam Rapstar was released at the end of 2010, and invites players to rap along with popular songs. It is already part of an ongoing lawsuit, as record label giant EMI says that 4mm Games and Terminal Reality, the developers behind the title, did not acquire the rights for a number of songs used in the game. City National now claims that Konami and Autumn Games assured the bank that revenue from sales of the game would go towards covering the $14 million loan that was given to the companies, reports Courthouse News. Konami and Autumn allegedly told the bank that Def Jam Rapstar was projected to ship 2.5 million units in its first year -- projections which the bank calls "baseless and unrealistic" in its complaint. Furthermore, the bank says that it is yet to see a penny paid back from the companies towards the loan repayment. "CNB has recently learned that defendants' representations concerning financial conditions and repayment of the loan - both before and after the loan was approved - were false at the time they were made and that defendants never had any intention of repaying the loan as promised," the complaint reads. "Rather than paying game-related proceeds directly to CNB as agreed, defendants have kept all game-related proceeds for themselves and have refused to remit any such proceeds to CNB." It continues, "By the time CNB learned the true state of affairs, Autumn had drawn down $13,987,003.15 of the $15 million line of credit. To date, defendants still have not paid CNB a single penny of the principal amount that is due, and they continue to insist that none of the proceeds from sales of the game are owed to CNB and/or available for repayment." City National is seeking more than $8.9 million in damages for fraud, negligent misrepresentation, breach of contract, breach of covenant of good faith and fair dealing, money had and received, unjust enrichment, recovery of personal property, and punitive damages. Gamasutra has contacted Konami for comment.

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