Diamond Properties in Mount Kisco is suing a sports photo and memorabilia company for $650,000 in lease payments the tenant allegedly stopped paying after it was acquired by a Las Vegas company.
DP 21 LLC, a Diamond affiliate, sued Photo File Inc., Photo File LLC and Globe Photos Inc. on Jan. 10 in Westchester Supreme Court.
After Globe acquired Photo File’s assets in 2018, the complaint states, the assets were transferred to the similarly named Photo File LLC.
“Photo File became a judgment proof shell and ceased operations as a separate entity,” according to complaint, “leaving it with no ability to pay any of its obligations to DP21.”
Globe Photos did not respond to an email request for comment.
Photo File was founded in 1987 by Charles Singer, who was kept on as president by Globe Photos’ new Photo File subsidiary.
It has licenses with the NFL, NBA, Major League Baseball, National Hockey League and major colleges to produce sports photographs and merchandise, according to the 2018 press release announcing the acquisition. Its assets include more than a million negatives and vintage sports prints and more than a thousand autographed lithographs and memorabilia. It has revenue of about $7 million annually and employs about 50 people.
Globe Photos, based in Las Vegas, was founded in 1939, and purportedly has a library of more than 10 million images of Hollywood stars, pop musicians and other celebrities. The publicly traded company booked about $6.6 million in revenue in the past year.
The company has struggled in the over-the-counter market, with its stock price declining by nearly 90%, from a 52-week high of $22 per share to a low of $2.25. As of September, it had a negative profit margin of nearly 195%.
In 2007, the original Photo File leased nearly 43,000-square-feet in Diamond’s massive office and warehouse building at 333 North Bedford Road in Mount Kisco.
Photo File sold its assets to Globe Photos for nearly $7.3 million, according to a 2018 Securities and Exchange Commission filing. The price included the office and warehouse lease and other liabilities valued at $1.5 million.
But Photo File failed to pay rent in 2018, 2019 and 2020, Diamond’s lawsuit alleges, and as of Jan. 1 it owed $650,382.
The original Photo File has ceased operations, and Globe Photos and the newly organized Photo File LLC occupy the Mount Kisco warehouse and offices.
Photo File’s asset purchase agreement, according to the complaint, “rendered it an insolvent shell and unable to pay its creditors.”
Diamond accuses Globe Photos and Photo File of breach of lease, fraudulent conveyance and unjust enrichment, and it is demanding money damages based on the lease.
Diamond is represented by Mount Kisco attorneys Mona D. Shapiro and Steven E. Waldinger.