With Mortal Kombat on the selling block, it means that Midway may unload the company's most successful franchise, along with the chance to leverage the series in the future.
"They are in a cash crunch, and have to do whatever necessary to survive," Wedbush Morgan analyst Michael Pachter told Edge. "I think it is tragic, and reminiscent of Atari's sale of the Driver franchise."
But Geoff Mogilner, Midway's head of investor relations said in a phone interview, "We're not going out of our way to sell Mortal Kombat." He said Midway may keep its properties instead of selling them off in pieces. "That's management's goal, to keep the company together."
Mogilner would not specifically comment on any potential buyers of Mortal Kombat, but noted that the franchise is always profitable and very well known.
November 2008's most recent Mortal Kombat entry, Mortal Kombat vs. DC, shipped 1.8 million copies as of late January.
Earlier this year, Mortal Kombat co-creator Ed Boon said Midway is already working on the next installment.
Bonuses for "key employees"
A court filing last week detailed the criteria for 29 officers, management-level workers and other key employees who would divvy up over $3.75 million in bonuses if certain corporate milestones were met.
One milestone, the signing of a publishing deal for the upcoming Wheelman game, has already been reached with a recent agreement with French publisher Ubisoft. That milestone is worth $497,500.
The heftier bonuses pertain to the sale of the Mortal Kombat franchise. For a bonus of nearly $1.3 million, Midway would have to either enter an agreement to sell the storied fighting franchise or submit a reorganization plan that would allow Midway to continue as a going concern.
Eligible employees would divide another bonus of nearly $2 million for confirming a plan of reorganization or liquidation or the actual closing of a sale of Mortal Kombat.
"It's a standard plan that just about any company that's in bankruptcy will submit," said Mogilner. "What it does is give incentives to key employees--not executives--across all disciplines, finance, legal, marketing, not just product development.
"It's designed to incentive-ize these employees whose workloads have greatly increased because of this bankruptcy. These guys are working their butts off, working nights, weekends, because of all the paperwork that goes into bankruptcy. A lot of these guys don't benefit from game royalties.
"...It's not executives padding their wallets. It's a standard employee incentive plan."
Mogilner said there may be modifications to the "key employee incentive plan," or KEIP, as the bankruptcy proceeds.
Vacation pay revoked?
A Monday Kotaku report cited purported letters to a recently laid off Midway employee who pointed out that his or her former employer may be backtracking on an agreement to pay out unused paid time off.
"Payouts of any post-employment monies or benefits originally scheduled for payment on February 13th and beyond, including any reimbursements for premiums paid for health insurance coverage under and pursuant to COBRA, will not be made until the relevant classes of claims under the Chapter 11 case are resolved, and then only to the extent that resolution provides for payment," read a letter allegedly from Midway human resources VP Steve Marrin.
"I realize this information and the related actions will not be well received."
Mogilner said he "does not know where those documents came from," and would not confirm their legitimacy.
The rep countered the idea that Midway executives are filling their pockets with the vacation money of laid off workers. "There's a cap, and the courts have to allow us to pay them," Mogilner said. "It's just a matter of the timing of things. ... It's a ridiculous assertion that we're taking money from former employees and filling the pockets [of execs]. The amount of the [paid time off] was much lower than the amount of money that we're paying these key employees that are working so hard to get us through this bankruptcy process."