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THQ denied quick bankruptcy sale in wake of creditor complaints
THQ denied quick bankruptcy sale in wake of creditor complaints
January 7, 2013 | By Mike Rose

Following complaints from THQ's creditors, a U.S. court has denied the publisher's bankruptcy sale process and loan arrangements, stating that THQ did not give potential buyers enough time.

THQ filed for bankruptcy last month, and said that Clearlake Capital Group was fronting $60 million to acquire its business, including its development studios and all of its games currently in development.

However, with the Clearlake deal scheduled to go through this week, several of THQ's lenders filed objections alleging that THQ has an agenda that works out well for the company, but not so much for its creditors.

U.S. Bankruptcy Judge Mary F. Walrath has now agreed with the creditors, according to Bloomberg, noting that THQ did not make enough effort to market the company for sale, instead attempting to push through an aggressive sale process with Clearlake.

"I have problems concluding that the pre-petition sale process was fulsome," Walrath said, adding that THQ "did not even put out to the public that it was for sale" until Clearlake had signed a non-disclosure agreement.

Walrath also noted that around 10 potential buyers had contacted THQ after discovering that it was up for sale -- evidence, she said, that THQ wasn't doing everything it could to maximize the sale.

Those potential buyers include Warner Bros. Entertainment, who has said that it is currently evaluating THQ's assets and may put a bid in.

THQ says that it was looking to sell quickly due to $37.5 bankruptcy loan it wants to take out, that would need to be paid off by January 15. However, Walrath noted, "I am not convinced that we are under the gun to have a sale process by the 15th." She instead said that the involved parties would "need to talk" about the loan at a hearing set for later today.

Walrath had something to say about the way in which THQ is being sold as a whole package, too. She noted that THQ's "individual titles may have substantial value," and that the current requirement to purchase the entire company in one go "may depress bids" -- although she's made no ruling on this as of yet.

Update: THQ has announced a series of compromises that were decided during the hearing yesterday. Interested parties now have until January 22 to place bids on THQ's franchises, extending the original timeframe by two weeks.

It's also notable that the new auction will now allow bidders to put money down for specific assets, such as IP and studios, rather than the whole of THQ's business.

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Justin Sawchuk
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I just hope saints row #4 doesnt die.

Wylie Garvin
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"due to $37.5 bankruptcy loan" ? something seems missing there

David OConnor
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Yes, it seems believable that THQ management rushed through the sale to Christmas, and timed it at Christmas... to keep their jobs. It really sounds like a private deal took place beforehand.

I can completely understand why the creditors are suspicious.

Other buyers may not be so kind as to keep the current management team.

Ramin Shokrizade
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This news comes as some relief as the original deal seemed to severely undervalue the IP under THQ control. I can understand why management may have wanted to guarantee their jobs at any cost, but I doubt such guarantees extended to the rank and file. I suspect that the individual IPs sold separately will yield significantly higher returns than $60M, though this may be more disruptive to the company. In the long run, I think it is more likely that those projects that are viable will get fully funded, while those that are not will be retired as they should be.

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So 3rd parties get to buy development teams rather than acquiring the whole company. EA and Warner Brothers have already been sighted as interested, while Ubisoft remains rumored. Given this option can it be divided or will one company just try and go for broke.

Beyond Good and Evil
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Have a look at any one of the IP that are being talked about openly - then add the objective reality that once you buy the IP you likely will have a) none of the original dev team, or b) a very diluted subset of those teams (because of course your best people depart first in times like these) - put that all in a nice big shiny stainless steel bowl and stir until frothy.

Then put that toxic goo into a nice formed pan called a "P&L" - what you will get, once it comes out of the proverbial oven is - "unless I can buy this IP for low millions of dollars there is NO WAY I can possibly make any money on it".

Multiply all that by the # of IP at issue here and all of a sudden $60 million starts looking like a lofty peak indeed.

Isn't the game industry fun boys and girls?

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