Shrapnel’s ‘Neon Machine’ Files Lawsuit Over Hostile Takeover

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Neon Machine Lawsuit

A major lawsuit has been filed by Shrapnel’s game studio, Neon Machine. At the core of this conflict are claims of a hostile takeover by the company’s leading shareholder and the CEO of 4D Factory, Cort Javarone, who’s under scrutiny for ousting the CEO, Mark Long.

Making matters worse, Javarone is reportedly refusing to release equity to additional stakeholders, a move most commonly made to maintain a controlling stake within the company. The investors suffering losses include those that injected $20 million into Shrapnel last month, like Griffin Gaming Partners and Polychain Capital. 

Staying positive during this moment of turmoil, Shrapnel asserts its dedication to rolling out early gameplay access as usual — in just weeks to come.

Investigating the Neon Machine Lawsuit

On November 13, Javarone is said to have appointed himself as the CEO of Neon Machine, removing the previous one from the studio’s executive board (although Long affirms his ongoing CEO status on Twitter). 

Javarone is rumored to have taken over the studio in a bid to wipe his debts amounting to $45 million clean. Notably, he has allegedly filed his company for Chapter 5 bankruptcy. 

To regain control of the studio, Neon Machine’s founders — CTO Don Norby, CCO Colin Foran, COO Aaron Nonis, CMO Mark Yeend, the Head of Business Development Naomi Lackaff, and the “former” CEO Mark Long — filed a lawsuit at the Delaware Court of Chancery yesterday. 

Within this legal filing, other individuals alongside Javarone were apparently named as defendants, including 4D investor Steve Horowitz and Scott Honour from the private equity firm Northern Pacific Group. Sources declare the document indicates that these investors are acting out to maintain their majority of control on the board, potentially exposing the company to liabilities worth tens of millions of dollars. 

As previously shown, Shrapnel sustains an upbeat profile on Twitter despite these ongoing challenges. As does Shrapnel’s Studio Head, sharing, “We’re building a best-in-class game and state-of-the-art platform, and nothing will divert from that mission”. Nevertheless, this doesn’t prevent the potential outcomes of this legal battle on Neon Machine’s financial well-being and future projects from raising concerns.

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