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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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