Red Herring defaults, again

When Red Herring, the troubled tech publisher, got an eviction notice, editor-in-chief Joel Dreyfuss tried to pass it off as a quirk of publisher Alex Vieux's financial-management strategy. "That's just how Alex pays his bills," said Dreyfuss. Or rather, doesn't pay his bills. Already, Vieux's Herring has been ordered to pay Comerica Bank $180,457 plus interest for an unpaid loan. But now, it looks like he don't even have the time, money, or inclination to dispute his debts. A look at San Mateo County Court records reveals that two recent cases brought against Red Herring, Inc, have been awarded to the plaintiffs in default judgments. In other words, Vieux's legal representatives didn't even bother to show up in court.

The first case, brought by online distribution service Zinio, explains why Red Herring disappeared from both physical stores and Zinio's virtual newsstand this summer. In June, Zinio sued for breach of contract. Red Herring apparently never responded to the complaint. In August, Zinio was awarded a default judgment worth $229,863.07.

The second case, a suit brought by a former employee suing for back wages and unpaid expenses, a total of around $15,500. According to the lawyer for the plaintiff, Red Herring never responded to the initial complaint, and never made a move to settle with the plaintiff. Red Herring was found to be in default regarding this case on September 26. A "proveup" hearing will be scheduled for the ex-employee to present to the judge the cost of damages. Because Red Herring is in default, they will not have the opportunity to respond to the amounts that the ex-employee demands.

We wonder how Dreyfuss will explain these latest financial shenanigans. How the Herring manages to spend money on a new online-video venture, a relaunched website, and a social network, and yet still not pay its vendors or employees the money due them, is a mystery that only grows with every day Vieux's Herring remains open. Where is the cash coming from?