Area 51 debacle cost them dearly...

Please, can a Nobel Price please explain to me:

How comes that a company A with a big debt K, owned and managed to raise that debt by X, is sold by X to Y, and now, 2 months later, A and Y owe to X the debt K plus another big J in compounded interests? No, because me and other 4-5 billions people don't understand that.

...which coincidentally is the approximate number of people who have no idea what you just said.

An accounting stunt on the original owners (A) part. With a couple of assumptions it could go like this: A is part of large public entity with reporting obligations and owns/controls company B with large debt N owed to A but possibly to numerous other entities. B's only asset are some difficult to appraise IP rights. B is a money sink and without further support bankrupt. Due to consolidation requirements, A's books show B's third party debt as liabilities with little assets against those. In case of B going out of business, A needs to report B's internal and third party debt as immediate loss. In any case, N would need to be adjusted down in value. Shady solution: Sell B to a fall guy and avoid reporting your loss immediately. Turn your old liability into an asset(!) as you now expect payment from an independent entity. Implement additional evil default penalties to manage the write down on the value of B's debt. Argue that there is residual value in the IP owned by B.
Depending on how much was learned from Enron, mileage may vary but the overall effect on A's books is at least positive, you screw outside debtors and you gain time to liquidate the IP while working around reporting requirements. Something like that. I am speaking about the fictitious company you described, any similarities to real events, people or the original post are purely coincidental.

i'll just assume it sucks to be Midway.

MK chapter 11 sounds overdue for a company that has lived up to its name doing everything Mid-way and not taking it All the way to the cutting edge finish. This company has just been a tax write off for those who needed it.

Wring out the sponge and send the next MK chapter to Capcom the folks you ripped it from in the first place and pay back some debt.

Agreed with Key Rob on this one.
And I met with one producers in A51 a few years back.
He=no clue what he was doing.
If his ignorance was any indication of the rest of the organization, then its shocking to me they held on for this long.