THQ creditors, US Trustee take issue with quick sale
By
Eddie Makuch, News Editor
Committee of noteholders, Roberta DeAngelis not happy with publisher's expedited sale process or terms.
As part of THQ's bankruptcy declaration last month, the company revealed plans to sell itself to Clearwater Capital Group in 30 days for $60 million, subject to court approval. That approval has been contested, as THQ creditors and US Trustee Roberta DeAngelis have raised concerns regarding the publisher's expedited sale process and terms.
Distressed Debt Investing reports that DeAngelis, who is overseeing the THQ bankruptcy filing, has entered an objection. Her claim states the timing of the sale (scheduled to be completed January 10) is being held in too short a window to allow interested parties to take part in the sale process. She also notes that fees and expense reimbursements due to Clearlake (estimated at $2.25 million) are "excessive" when compared to the total cash offer in the bid.
Some THQ creditors are similarly unhappy with THQ's expedited sale process and filed their own objection. The group claims the sale should not be approved because the terms are "not fair and reasonable and were not designed to (and, in fact, will not) maximize the value of the [THQ's] estates." The creditors claim THQ management set up the auction not to maximize the value of its assets in an effort to make good its debts, but rather to keep jobs in place and ensure THQ, as a whole, will live on.
"Taken as a whole, the Bidding Procedures are designed specifically to ensure that Clearlake is the successful bidder and that [THQ's] business will continue as a 'going concern,' whether or not such outcome would be in the best interests of the [THQ's] unsecured creditors and/or maximize the value of [THQ's] estates," a line from the document reads.
The claim also takes issue with a requirement that prospective purchasers bid on THQ as a whole, rather than on a title-by-title basis. This would eliminate the possibility of potential buyers bidding on franchises they are most interested in, instead forced into an all-or-nothing option.
Much like DeAngelis, the THQ creditors believe the sale process timeline was much too quick. "Under any circumstances, [THQ's] proposed timeline would be extremely aggressive--under the present circumstances, they are unfair and unreasonable and should not be approved." The creditors also bemoaned the timing of the sale. They said holding such a process during the holiday season--when numerous interested parties are away--compounds the difficulty of maximizing value for creditors.
A hearing concerning the THQ sale bidding procedures will be held today, with prospective bidders required to submit their bids by January 8. The actual auction will take place January 9 and the final sale hearing will be held January 10.
By
Eddie Makuch, News Editor
Eddie Makuch (Mack-ooh) is a News Editor at GameSpot. He works out of the company's Boston office in Somerville, Mass., and loves extra chunky peanut butter.
65 comments
The economic shell games in the U.S. continue.The whole government is bankrupt and continues to try to borrow its way out and it supprises us when corporate whores do the same?! Shame on us. We all need to stop living on credit. Or have our MTV attention spans already forgot the bailouts that only benefited said whores. The people still lost their homes.
@ChevLss No, it doesn't surprise anyone. Also none of your rant addresses the actual situation here. In fact, this article goes over complaints of the rushed filing where our own fiscal crisis is a result of stagnated legislation, which is the exact opposite of rushing. Then the MTV attention span thing, what's that got to do with this? And then the note about people losing their homes - completely off topic.
3 Like People don't know math.
1) THQ made debt. They need to pay it.
2) On the other hand, the company has to be sold quickly otherwise it's value will drop.
3) The company is in debt. People will have to be fired to make it stable again. And it will be bought out. So there will be redundancy. People will be fired either way. Selling in with a stable and clean plan allows jobs to be saved. There needs to be a balance.
4) Half the people complaining probably pirated at least one game from THQ. So congrats. You added to this situation.
More on my third point, if it is not done correctly, you just get another GM. Truckload of money pumped into the company. Company goes bankrupt anyway and fires people. If this is not done correctly, THQ will just have to fire more people later on. Better doing it right the first time.
3 Like The thing I enjoy most about gamespot message boards are the children/liberals that have no idea how business works and they just run around and call everyone greedy because they have no idea what is going.
4 Like @bizuit The "This is how business works" mentality is exactly why the game industry (along with other industries) is in the crapper. Thinking only about the short term payoff, as most publicly traded companies and especially these creditors are doing, instead of long term ability to continue making a quality product as THQ is attempting to do by preserving its company's structure, often has a long term negative effect on both. This is how you might be told business has to work by investors, but it isn't how business MUST work.
Bonus points for assuming anyone who ever learned a different model of business is a child or a liberal. It doesn't help discussions about how businesses are run if anyone who disagrees with the status quo is ignored.
2 Like @bizuit Right. THQ made debt, they need to pay up. Now it's reasonable to want this to go quickly and possible though. The longer they wait the more likely the value of the company will sink.
@BlackSquare @bizuit RE sinking; not up on US business practice, but over here in europe if a company goes bankrupt, all trading in stock is suspended.
It's the same thing here. Thing is that if the sale doesn't go through, the bad business practices will be revealed in a longer process. Thus the value of the company will sink. Also just waiting longer tends to lower the price unless there was a bidding war.
It's like having a used car. The longer you wait the less it's worth. Unless it's so old it becomes a classic.
8 Like F*ck the creditors, THQ are just protecting their company and employees in the long term, creditors don't care about the future of their company or the lives of the employees or the quality of their products, they just want their profit and they want it now. Is it any wonder that our economy is down the toilet when people get fired on a whim because the creditors must have their projected return on their investment at all costs.
What happens to THQ when they are picked apart and sold off seperately and left with a husk of a company with a few ip's nobody wanted, most employees are fired to maximise the creditors profits and any loans/mortgages debts that those employees owe then go unpaid and sets off a chain reaction ending with the tax payer bailing out the banks bad debts, because the creditors need their profit and they don't care what the consequences are for anybody else.
People defending creditors and their thirst for profit are idiots, it's their system of profit at any cost that allow big business to take over our economy. In our societies creditors can't lose, they are always protected and propped up by the tax payer. God forbid the creditors and banks make a bad decision and take a hit once in a while along with everyone else.
@St0Ne4Ge Who needs to pay their debts anyways! Borrow whatever you want, stiffing bank is the cool thing to do now!
@St0Ne4Ge So we're supposed to believe that a company that specializes in "special situation transaction" (read: distressed companies) is going to save those jobs because they bought THQ as a whole? The notion that THQ is doing something noble here is naive.
I truly feel that it is unlikely that the employees are going to come out of this well - regardless of which large corporation(s) gobble up THQ...
3 Like Microsoft should buy them and finally get a good First Party lineup going, they need one.
"a requirement that prospective purchasers bid on THQ as a whole, rather than on a title-by-title basis...forced into an all-or-nothing option" Lol, THQ like other companies, don't want to give them a demo, eh? It's either buy the whole game or not play the game at all to see if it's to your liking - all or nothing.
@DesertLynx83 It's not illegal and the creditors are humiliating themselves by complaining about the season. Lending is their profession, which all of us are expected to do around the holidays.
@Megawizard No, it'll go through. THQ can't really bomb out at this point. Once they file, they're the taxpayer's problem. Their creditors just want an extension on the sale so they can get a bigger check. Which is fine, it's their job I guess. They could do it with less whining though.
F you THQ! you want to keep jobs and the company open!? Not just get your already rich shareholders more money by bleeding the company dry!? JERKS!
1 Like Kinda agree with her objection at this point. If you are a creditor you certainly have a right to expect the most return out of this poorly run company, assets and all. If THQ management seems more interested in colluding the process, then THQ deserves the worst fate possible.
Don't really care for THQ at this point. Hope for the worst.
1 Like there was another article in gaming industry international website that stated the creditors and those interested in buying up HQ assets were want to wait till bankruptcy sold off THQ bit by bit.
I applaud THQ company for looking more toward talent, employees, and IP's that have been developed by them over the year's.
no one wants to see people's hard work and career's being picked apart piece by piece like a dead body- oh yeah except for vultures.
@Mr_Big_Boss @jenovaschilld Well, they are once their investments fail yes. They do need to make returns on their investment, they could just do it more quietly though.
@Mr_Big_Boss @jenovaschilld Since THQ was clearly unprofitable and would have folded long ago as a private company, pretty much all of the recent THQ games were only made possible thanks to the money from those "vultures."
Think about that.
Oh and lets not forget, THQ is trying to ram a 30 day bankruptcy down everyone's throats during the holidays to further reduce the number of days allowed to evaluate the company so that Rubin's buddies can buy it on the cheap.
https://twitter.com/DDInvesting/status/287314215671320576
Hunter ?@DDInvesting
THQ: Lawyers for Warner Brothers states they have team ready to complete due diligence if more time is allowed.
Rumor has it that the stepfather of the THQ president is on the Clearlake board of directors. *Hinthintgoldenparachuteassured*
@Thanatos2k You're a bit confused. The president of THQ (Jason Rubin) has a "good friend" there. Skip Paul.
Relevant portion:
Centerview senior advisor Skip Paul has close ties to Rubin, who joined THQ in May. Paul worked with Rubin when he was an executive at Universal Studios and more recently invested in Rubin's digital media start-up Flektor, which was acquired by MySpace.
2 Like THQ management are a bunch of scum bags. Did you know that they had to disclose the terms of their loan to investors? Well they had a loan with Wells Fargo and disclosed the terms of the loan and paths of default but somehow neglected to disclose the ONE way they actually defaulted when they filed their documents with the SEC. Then when they filed the bankruptcy documents, they disclosed that their foreign subsidiaries are SITTING ON MILLIONS OF DOLLARS IN CASH but that the "independent directors" of those subsidiaries wouldn't send them the cash because of the default (from the previously undisclosed terms). Better yet, those foreign subsidiaries are not being included in the bankruptcy. That means their pals (Jason Rubin's "good friend" at Centerview is the guy that's working this deal) would buy the company for 60 million dollars then IMMEDIATELY recover a good portion of that from the cash that the non bankrupt subsidiaries are sitting on. It gets better, they're actually only paying out half that 60 million in cash. For instance they're to "pay" the bond holders in more bonds. Right now the bond holders have 100 million dollars in bonds that yield 5% annually. Rubin's pals are trying to "pay" them with 10 million dollars in bonds that yield 3% annually. No wonder the bond holders are pissed off.
I hope to god we see some justice.
THQ future is becoming very blurry
with that amount of debt it's or selling out or dying out.
@thequickshooter ... it is selling and will probably die out thats what the article is saying
3 Like This is one of those moral grey areas.
The right thing is to pay off your debts.
Keeping peoples jobs is a good thing and helps make your company continue on. This can be considered a good thing but is not necessarily the right thing.
I'm not taking any side on this, I just find it interesting.
I really worry THQ may not pull through all this, but at the same time I'm glad they wont go down without a fight. Good on them.
1 Like @TheCyborgNinja Right? The creditors are throwing a fit because they might not get back all their money. And why is that? Because THQ is looking out for its employees instead of the people they owe money. Shame on them for doing what most would deem is the "right" thing.
1 Like @Yomigaeru @TheCyborgNinja Yes because these creditors are robots and not people too. You realize these creditors also have employees. They have bills to pay.
People are all for borrowing money but they think it's evil when they are asked to pay it back.
@Yomigaeru @TheCyborgNinja Most people think welching on their debts is the right thing? Do they?
9 Like "The creditors claim THQ management set up the auction not to maximize the value of its assets in an effort to make good its debts, but rather to keep jobs in place and ensure THQ, as a whole, will live on."
This is the key statement everyone. They're trying to save the people that helped build the company. I think most of you people here don't have jobs, and your parents pay all your bills.
3 Like @adroge1 Wrong. We have jobs, and we pay our bills. THQ can't pay their bills, those people need to find other jobs because if you can't afford your bills, then you cannot afford employees.
What really amazes me are the mentally challenged people who think choosing employees over paying bills, yet were most likely the same ones screaming "HELL NO!!!" when GM and the banks all got bailouts.
That's what you, and THQ, are wanting here. A bailout. Isn't going to happen. Let THQ and it's cronies sit down there in obscurity with Curt Schilling and 38 Studios.
1 Like "The creditors claim THQ management set up the auction not to maximize the value of its assets in an effort to make good its debts, but rather to keep jobs in place and ensure THQ, as a whole, will live on."yeah, because god forbid they think about jobs and families rather than lenders. i see what they are saying, they want their money. but that honestly looks like they are nothing but scavengers and birds of prey.
3 Like @another_drew Wtf. I'm amazed at how people view lenders like they are evil robots. These companies have employees to. They have bills to pay.THQ couldn't manage themselves properly and went bankrupt. The employees can find new jobs. The CEO's will have to find new ways to buy their yachts.
I hope one day that you borrow someone money and they never pay it back. So you can sit in your puddle of hypocrisy.
Just more proof that in this economy. People will sell out in a heart beat for a quick buck than take the time to earn the money properly for a higher quality return.
One thing i say THQ should do is just relax, do what there doing. But make sure all the rights of the games and all that nonsence stay with them and the company, so that once there soon to be released games come out (metro: last light, CoH 2 and so on) and they make 'hopefully' all there money plus more back they will be stable enough and able to keep going strong. :)
That's what they are trying to do. That's the "all-or-nothing" deal the creditors object to.
@fightingfish18 @Plo_Koon_basic Indeed. The creditors are angry because they might get their money, and they won't be able to pick and choose what properties to purchase. Basically, they can't do things on their terms, so they cry foul.
2 Like @Yomigaeru @fightingfish18 @Plo_Koon_basic No, the creditors are angry because THQ is being as obvious as possible that Clearlake is a shell, so they can basically sell themselves to themselves to avoid losing their IP's while also paying the creditors as little as possible, which happens to not only be unethical but illegal.
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