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THQ Files for Chapter 11; Plans Sale

THQ has filed for Chapter 11 bankruptcy as part of the process of selling its operations to an investor called the Clearlake Capital Group (thanks Joao via Gamasutra). The THQ Website explains this involves securing interim funding to continue the company's day-to-day operations and the plan for Clearlake to "serve as the 'stalking horse bidder' for a Section 363 sale process, which allows other interested parties to come forward with competing bids." Here's more:

The company is asking the Court for a schedule to complete the sale process in about 30 days.

Consumers and retailers should see no changes while the company completes a sale. The new financing will support business operations throughout the period. THQ does not intend to reduce its workforce as a result of the filing, and employees will continue to work their usual schedules and receive normal compensation and benefits, pending customary Court approval.

As is the case after a Chapter 11 filing, THQ expects to receive notice from NASDAQ informing the company that its shares will be delisted from the exchange within nine calendar days of notification.

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37. Re: More Big Picture Details Dec 19, 2012, 20:27 HorrorScope
Beamer wrote on Dec 19, 2012, 15:47:
Creston wrote on Dec 19, 2012, 15:33:
Can someone explain what's entailed in a Section 363 sale process?

Is there any chance of them continuing the way they have been, at all? I'd hate to see Saints Row go under...


A separate entity buys the rights to auction the company, in essence. THQ is somewhere along the lines of an $8 million dollar company. The rights to auction it were purchased for $60 million, so clearly people think it has value. If no one bids $60 million Clearwater gets THQ. If anyone bids more Clearwater gets a commission on that. That $60 million includes $10 million to debtors, but otherwise it's a sale of assets and not debts.

THQs goal is to still exist. Their stock is going to be delisted, but they fully expect to still exist. They're looking for someone larger to purchase them and keep them going. THQ has zero value to anyone not looking to do a video game company, so they'd stick around in some form. If you're in the home office, you should fear for your job. If you're in Volition you should fear what happens if a sale takes too long and cash runs out, but otherwise you have a future.

But what will ultimately happen if this is successful is that someone will own THQs value but not most of their debt (some of their purchase goes to that debt.) This leaves THQs only overhead being things like salaries and occupancy. They're mostly a healthy company like that, which is why they're doing this, but they saw no way to get out on their own.

Yes, this also works as yet another corporate welfare method. Where filling for bankruptcy personally has become more difficult. For example filing, then creditors still coming after you does exist now today for individuals. The Corporate world seems to have more freedoms. I've seen this "we'll go bankrupt" tactic and have the same owners on the other side still have the same business but minus the huge debt. I can't say this is certainly what is going on here, sort of sounds that way. But I know a few businesses in my area that have done pretty much this. It is seemingly a viable working business strategy.
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