Feeds

Mortal Kombat maker Midway goes titsup

Bondholders call shenanigans

High performance access to file storage

Saddled with debt, American video game maker Midway has filed for Chapter 11 bankruptcy.

Creator of the long-running Mortal Kombat said it is seeking protection from creditors after a change in ownership last year pushed forward the deadline for Midway to pay off its debts.

The company said Chapter 11 protection will let the company conduct its business as usual (of losing money annually for nearly a decade). Midway stressed bankruptcy would affect only its US operations.

The events surrounding Midway's crippling debt has spurred a group of the company's bondholders on Friday to file an objection to the bankruptcy. Filed in Delaware court, the complaint claims Midway's plea for relief is "tainted by highly unusual transactions" from Midway insiders which, "to put it charitably, require significant scrutiny."

Midway's bank book has been in hot water since December when the majority shareholder and media mogul Sumner Redstone sold off his controlling 87.2 per cent stake in the company to private investor Mark Thomas for a fire sale price of $100,000 and $70m in debt.

The change in ownership triggered debt repayment clauses that allowed creditors to ask for more than $150m in outstanding notes that otherwise wouldn't have been due until 2025.

The objecting bondholders claim months before Redstone's departure, he ballooned Midway's loan obligations from $15m to $90m in loans issue by the Redstone-owned and controlled entertainment company, National Amusements.

According to the filing, the bondholders said they believe that as a consequence of the sale to Thomson, Redstone was able to capture the benefit of substantial tax losses that would otherwise have been available to Midway.

They also appear to cast doubts about the motives and very identity of Thomas in the filing. They describe him as a "very secretive individual" that is "virtually unknown in the video game industry."

The group claims that no formal disclosures have ever been made regarding the basis for the Redstone-Thomas transaction and that no disclosure has been made regarding Thomas and any potential relationship he or his companies have with any Redstone party. But they claim it's "safe to assume" there is a connection "given that Redstone essentially gifted his rights in the Debtors to Thomas."

Firms objecting to the bankruptcy filing include Highbridge International, Tennenbaum Capital Partners, Magnetar Financial, and Lanphier Capital Management.

A copy of the complaint can be found here. (PDF) ®

High performance access to file storage

More from The Register

next story
Video games make you NASTY AND VIOLENT
Especially if you are bad at them and keep losing
Report: Apple seeking to raise iPhone 6 price by a HUNDRED BUCKS
'Well, that 5c experiment didn't go so well – let's try the other direction'
Nvidia gamers hit trifecta with driver, optimizer, and mobile upgrades
Li'l Shield moves up to Android 4.4.2 KitKat, GameStream comes to notebooks
Gimme a high S5: Samsung Galaxy S5 puts substance over style
Biometrics and kid-friendly mode in back-to-basics blockbuster
Dell Wyse Cloud Connect: Pocket Android desktop
Ultrathin client with a lot of baggage. The upside? It's a rogue sysadmin's delight
AMD unveils Godzilla's graphics card – 'the world's fastest, period'
The Radeon R9 295X2: Water-cooled, 5,632 stream processors, 11.5TFLOPS
Sony battery recall as VAIO goes out with a bang, not a whimper
The perils of having Panasonic as a partner
Zucker punched: Google gobbles Facebook-wooed Titan Aerospace
Up, up and away in my beautiful balloon flying broadband-bot
NORKS' own smartmobe pegged as Chinese landfill Android
Fake kit in the hermit kingdom? That's just Kim Jong-un-believable!
prev story

Whitepapers

Mainstay ROI - Does application security pay?
In this whitepaper learn how you and your enterprise might benefit from better software security.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
3 Big data security analytics techniques
Applying these Big Data security analytics techniques can help you make your business safer by detecting attacks early, before significant damage is done.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Mobile application security study
Download this report to see the alarming realities regarding the sheer number of applications vulnerable to attack, as well as the most common and easily addressable vulnerability errors.