Video Game Company Files for Chapter 11 Bankruptcy
December 27, 2012
THQ, a popular video game publisher, has sought Chapter 11 protection under bankruptcy law after declining sales and stock prices hit the company hard.
The company has already lined up a stalking horse bid of nearly $60 million from private equity firm Clearlake Capital. The sale, which is expected to be completed in roughly 30 days, also includes a $10 million note for THQ’s creditors, according to Dow Jones Newswires. The company said that Wells Fargo and Clearlake Capital have also agreed to provide $37.5 million in debtor-in-possession financing while it reorganizes.
THQ plans to continue operations during this period and said that it does not intend to lay off any workers, many of whom are continuing to develop products for the company’s audience.
“Consumers and retailers should see no changes while the company completes a sale,” THQ said, according to Dow Jones. “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.”
The video game publisher is well know for the “Saint’s Row” franchise and World Wrestling Entertainment games. In addition, many of the company’s games are based off of Nickelodeon cartoons, such as SpongeBob Squarepants and Disney’s Princesses. The company also produced games mirroring popular shows, such as Biggest Loser.
The group saw sales decline after veering away from its children’s game division, and instead is now focusing more heavily on teen and adult games. In addition, the company saw severe second-quarter losses, which equaled more than half of its remaining cash.