THQ filed for Chapter 11 bankruptcy yesterday, and plans to sell all its assets, including its IP portfolio, development studios and contracts with the likes of Crytek and Obsidian, to a private equity firm. The ailing publisher insists, however, that its day-to-day business will be unaffected while the deal is completed; no studios will be closed, there will be no layoffs, and none of its in-development games will be cancelled.
The deal, which is subject to court approval, is with Clearlake Capital Group, which is acting as a “stalking horse bidder”: one selected by THQ to open the bidding for its assets at a set price to protect the company being picked up for a song. If the Delaware district court where THQ filed for bankruptcy approves the deal, it is expected to be completed within 30 days. Clearlake is funding THQ throughout this waiting period to ensure that development of games including South Park: The Stick Of Truth, Company Of Heroes 2 and Metro: Last Light is unaffected.
In a message posted on the publisher’s website, Jason Rubin, Naughty Dog co-founder and now THQ president, sought to clarify what the deal meant in plain English – and play down the significance of his company’s troubled year ending in bankruptcy.
“Chapter 11 [bankruptcy] is a safety net for US companies,” he wrote. “American Airlines is currently in Chapter 11 restructuring, yet I flew back and forth on that airline when I visited Volition two weeks ago. Donald Trump and his companies have been in Chapter 11 four times.
“MGM filed for Chapter 11 two years ago, and this year it released Skyfall and The Hobbit, two of the biggest titles of the year. That’s what I mean when I say new start!”
Fair enough – and good news for the THQ employees who have likely spent most of the year shuddering every time a meeting is called. But it’s not such good news if THQ owes you money, with one euphemistic turn of phrase in the news release announcing the deal saying the sale “will allow THQ to shed certain legacy obligations.”
THQ is in debt to the tune of $100 million – and of the $60 million Clearlake is pumping into the company, $10 million has been earmarked for creditors. If THQ owes you, you’re getting just 10¢ for every dollar you’re owed. The publisher’s stock is now all but worthless, and fell by almost 74 per cent yesterday, closing the day’s trading at a miserable 36¢.