• Hey, guest user. Hope you're enjoying NeoGAF! Have you considered registering for an account? Come join us and add your take to the daily discourse.

THQ creditors, U.S. Trustee object to company's quick sale, court hearing tomorrow

N

Nirolak

Mrgrgr
THQ's bankruptcy sale plan has received objections from the U.S. Trustee assigned to the case (they're assigned from the Department of Justice) and THQ's creditors, essentially accusing THQ of trying to give Clearwater a favorable deal to buy the company instead of pursuing what's best for those owed money by THQ.

The accusations include rushing the sale, putting unnecessary breakup fees on the sale to make outbidding unattractive, refusing to entertain piecemeal bids that could generate more money, and engineering a cashflow crunch to hasten the whole process.

A court hearing will happen tomorrow.

GamesIndustry.biz said:
...

When THQ declared bankruptcy last month, it also announced plans to sell itself to Clearlake Capital Group for $60 million within 30 days, pending a bidding process and court approvals. Those approvals may not come, as the Distressed Debt Investing blog reports that yesterday a pair of objections were filed in the case.

One objection came from US Trustee Roberta DeAngelis, who took issue with THQ's proposed auction process in bankruptcy court. DeAngelis said the schedule THQ laid out for the sale (with a proposed final sale hearing on January 10) was too short to let parties beyond Clearlake fully participate in the proceedings. Additionally, the $2.25 million in fees and reimbursements Clearlake would be due if another company won the bidding under THQ's plan was too large relative to the cash offered in the actual bid, according to DeAngelis' objection.

Some of THQ's creditors were similarly unhappy, as a committee of note holders from the publisher filed their own objection. In its filing, the committee alleged that THQ management had arranged the terms of the auction not to maximize the value of the company's assets so that it can make good on its debts, but to keep their jobs and keep THQ's doors open. For example, the group took exception to THQ's refusal to entertain offers for anything less than the whole company, eliminating the possibility of strategic buyers bidding for just the franchises or assets they need most. On top of that, the note holders are accusing THQ management of manufacturing its current cash shortage in order to increase the time pressures and force a sale to Clearlake on short notice.

"Taken as a whole, the bidding procedures are designed specifically to ensure that Clearlake is the successful bidder and that the Debtors' business will continue as a 'going concern,' whether or not such outcome would be in the best interests of the Debtors' unsecured creditors and/or maximize the value of the Debtors' estates," the committee stated.

The bankruptcy court hearing on bidding procedures for the THQ sale is scheduled for tomorrow. Under THQ's proposed time line, the auction would take place January 9, with the final sale hearing the following day.
Click to expand...
Source: http://www.gamesindustry.biz/articles/2013-01-03-thq-creditors-us-trustee-object-to-quick-sale

Deeper Article: http://www.distressed-debt-investing.com/2013/01/distressed-debt-news-trustee-objection.html
 
I

inky

Member
In its filing, the committee alleged that THQ management had arranged the terms of the auction not to maximize the value of the company's assets so that it can make good on its debts, but to keep their jobs and keep THQ's doors open. For example, the group took exception to THQ's refusal to entertain offers for anything less than the whole company, eliminating the possibility of strategic buyers bidding for just the franchises or assets they need most.
Click to expand...

I don't really know if it is a good thing for us either way. On the one hand, I want some studios to remain cohesive and retain their franchises and relative freedom to bring them to life. On the other hand, how many of those studios would survive and do successful games if THQ manages to avoid being gutted and sold in parts. I don't know if I could stand Ubisoft or EA now publishing Company of Heroes for example, but can they really succeed under current THQ?...
 
Jibbajabbawockky

Jibbajabbawockky

Member
So the gist of at least some of the objections is that in part, THQ should be more willing to sell off individual IPs and assets, possibly at the expense of the longer term health of the company? I guess that might make sense for the people trying to collect from THQ, but that seems like it would be a pretty quick route to killing THQ and pretty quickly resulting in all the people that work within THQ getting broken up or probably losing their jobs. Or those individual teams or developers could be sold off if there was a willing bidder?
 
TaroYamada

TaroYamada

Member
I assumed this after shareholders flipped. Fuck what's best for the consumers or employees, wall street fat cats gotta get theirs.
 
B

B-Dex

Member
Jibbajabbawockky said:
So the gist of at least some of the objections is that in part, THQ should be more willing to sell off individual IPs and assets, possibly at the expense of the longer term health of the company? I guess that might make sense for the people trying to collect from THQ, but that seems like it would be a pretty quick route to killing THQ and pretty quickly resulting in all the people that work within THQ getting broken up or probably losing their jobs. Or those individual teams or developers could be sold off if there was a willing bidder?
Click to expand...

As long as the people get their money ASAP. Nothing else matters.
 
N

Nirolak

Mrgrgr
Jibbajabbawockky said:
So the gist of at least some of the objections is that in part, THQ should be more willing to sell off individual IPs and assets, possibly at the expense of the longer term health of the company? I guess that might make sense for the people trying to collect from THQ, but that seems like it would be a pretty quick route to killing THQ and pretty quickly resulting in all the people that work within THQ getting broken up or probably losing their jobs. Or those individual teams or developers could be sold off if there was a willing bidder?
Click to expand...
In a piecemeal sale basically the studios/IPs would be sold off along with the contracts, so only the management that caused all this would lose their jobs, unless there was a studio no one was interested in.
 
D

Durante

Member
In its filing, the committee alleged that THQ management had arranged the terms of the auction not to maximize the value of the company's assets so that it can make good on its debts, but to keep their jobs and keep THQ's doors open.
Click to expand...
Those devils.
 
S

Scum

Junior Member
This fucking gen!

In its filing, the committee alleged that THQ management had arranged the terms of the auction not to maximize the value of the company's assets so that it can make good on its debts, but to keep their jobs and keep THQ's doors open.
Click to expand...

¬_¬
 
D

Data West

coaches in the WNBA
Derrick01 said:
Don't say things you might regret. South Park or whatever IP you like the most going to Activision or EA or even Ubisoft might change your tune quick.
Click to expand...

oh no, then they'll fill it with bad dlc
0.jpg
 
D

duckroll

Member
Okay, so my understanding of this update is that there is an implication here that THQ sort of engineered their Chapter 11 filing to attempt to further undervalue the company in a short period of time, so Clearlake can buy the entire company but at a lower than market price if it were to go on a normal auction, presumably so the management can keep their jobs for now, and possibly profit further in the near future when they then proceed to sell off the company piecemeal at a higher price on their their own outside of an auction.

Would that be accurate?
 
C

CambriaRising

Member
duckroll said:
Okay, so my understanding of this update is that there is an implication here that THQ sort of engineered their Chapter 11 filing to attempt to further undervalue the company in a short period of time, so Clearlake can buy the entire company but at a lower than market price if it were to go on a normal auction, presumably so the management can keep their jobs for now, and possibly profit further in the near future when they then proceed to sell off the company piecemeal at a higher price on their their own outside of an auction.

Would that be accurate?
Click to expand...

That was basically my take on this, but I can't say for sure.
 
K

Khezu

Member
duckroll said:
Okay, so my understanding of this update is that there is an implication here that THQ sort of engineered their Chapter 11 filing to attempt to further undervalue the company in a short period of time, so Clearlake can buy the entire company but at a lower than market price if it were to go on a normal auction, presumably so the management can keep their jobs for now, and possibly profit further in the near future when they then proceed to sell off the company piecemeal at a higher price on their their own outside of an auction.

Would that be accurate?
Click to expand...

I think.

I remember someone on gaf predicting this would happen when Jason Rubin Joined THQ.
I want to say he even named dropped Clearlake, but I might be remembering it wrong.
 
M

McBradders

NeoGAF: my new HOME
Khezu said:
I think.

I remember someone on gaf predicting this would happen when Jason Rubin Joined THQ.
I want to say he even named dropped Clearlake, but I might be remembering it wrong.
Click to expand...

o_O

That's Nostradamus levels of power if true...

...maybe even that guy who predicted that Mortal Kombat thing level of power :eek:
 
N

numble

Member
Nirolak said:
In a piecemeal sale basically the studios/IPs would be sold off along with the contracts, so only the management that caused all this would lose their jobs, unless there was a studio no one was interested in.
Click to expand...
Most purchases of studios would result in layoffs. Most employees work at-will and most any written employee contract would have provisions for layoffs in the event of purchase/merger.
 
S

Scum

Junior Member
duckroll said:
Okay, so my understanding of this update is that there is an implication here that THQ sort of engineered their Chapter 11 filing to attempt to further undervalue the company in a short period of time, so Clearlake can buy the entire company but at a lower than market price if it were to go on a normal auction, presumably so the management can keep their jobs for now, and possibly profit further in the near future when they then proceed to sell off the company piecemeal at a higher price on their their own outside of an auction.

Would that be accurate?
Click to expand...

Does this mean the vultures, the likes of EA, are about to start circling...?

Khezu said:
I think.

I remember someone on gaf predicting this would happen when Jason Rubin Joined THQ.
I want to say he even named dropped Clearlake, but I might be remembering it wrong.
Click to expand...

I think I remember someone mentioning this. Like how Jason seem happy to be working with a company to help THQ for the better or something.
 
S

sangreal

Member
Sounds about right. It's pretty obvious that they were trying to put one over on the creditors by dumping the debt before selling to Clearwater without even exploring other options

Khezu said:
I think.

I remember someone on gaf predicting this would happen when Jason Rubin Joined THQ.
I want to say he even named dropped Clearlake, but I might be remembering it wrong.
Click to expand...

Well there is sflufan who has been saying here (and elsewhere) that he knew it would happen because Rubin was the best man at one of the Clearlake managing partners wedding or something. I don't think he actually posted about it before it happened though
 
C

Chris FOM

Member
TaroYamada said:
I assumed this after shareholders flipped. Fuck what's best for the consumers or employees, wall street fat cats gotta get theirs.
Click to expand...

Well of course. The company has declared bankruptcy, which means that shareholders who have invested their money and own the company are about to lose most or all of it. This is saying that THQ basically aligned their bankruptcy to deny the shareholders maximum value for what they own. Why would should anyone in such a proceeding care about consumers at all (who own nothing and are owed nothing)? They're simply not a party to these proceedings and are therefore irrelevant.
 
You must log in or register to reply here.

Similar threads

[Polygon] Activision Blizzard shareholder sues over Microsoft sale
2
68
6K
Bernd Lauert replied
Sears reaches deal with Eddie Lampert to save company and roughly 400 stores
15
991
dolabla replied
  • Locked
Sports Authority plans to pay executives $2.85M in bankruptcy bonuses (Up: Rejected)
40
4K
Slayven replied
THQ's creditors cry foul over Clearlake plans
0
1K
TheOddOne replied
  • Locked
THQ's bankruptcy sale details: Auction on January 22nd, Will Allow Piecemeal Purchase
44 45 46 47 48
2K
302K
Nirolak replied
Top Bottom