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Midway creditors accept $1 million payout
To settle the outstanding claims against former owner Sumner Redstone, Bloomberg is reporting that the creditors' committee of the defunct publisher Midway Games has agreed to a $1 million cash lump sum payout. It was previously reported that prior to the lump sum agreement, unsecured creditors of the parent company would only be able to recover 16.5 percent of what had been owed, while unsecured creditors of subsidiaries would only be eligible to 25 percent. After reportedly liquidating its Chapter 11 plan last week, the new cash agreement represents a more financially beneficial deal for all parties involved. Midway's death spiral comes to a finale following a tawdry love affair with conspiracy-fueled headlines, including legal battles and multiple companies picking away properties from the company like vultures at a fresh corpse. The bankruptcy court will rule on the settlement agreement on June 23. [Via GI.biz]
Midway mystery man Mark Thomas settles with creditors, receives $5 mil
We'll be straight with you -- the whole Midway legal debacle is far from over. We are, however, one step closer to the dissolution of Midway as it stands now, with the company's creditors and 87% shareholder Mark Thomas reaching an agreement and ending at least one lawsuit. After purchasing the stocks from former majority shareholder Sumner Redstone for the low, low price of $100k, Thomas is cashing out -- he'll be receiving "as much as $5 million ahead of other creditors, whose claims aren't backed by collateral," according to Bloomberg. The lawyer representing Midway's creditors, Linda Dakin-Grimm, told Bloomberg, "The committee is satisfied with the settlement," noting that it would allow for efforts to collect on other debts to proceed. Warner Bros. Interactive has already put in its $33 million bid for the company, whose auction will end on June 29. Though many questions remain unanswered regarding the relationship between Sumner Redstone, Midway's Board of Directors and Mark Thomas, one thing is absolutely certain: the folks still employed by Midway are not profiting from the executive shenanigans. We wish them the best and encourage any employee who would like to speak up about their time at the troubled publisher to contact us, anonymity ensured.[Via GamePolitics]
Creditors fight back: MIdway gets sued
Sumner Redstone, his daughter Shari (a former Midway board member, mind you) and the mysterious Mark Thomas are all being sued, among others, by the various creditors that a nearly penniless Midway owes money to. Gamasutra obtained a copy of a 29-page lawsuit, detailing the alleged financial liberties taken by Midway's board (as well as the majority stockholders -- Sumner Redstone and now Mark Thomas), which accuses specific people of "breach of fiduciary duty, corporate waste and unjust enrichment." The suit claims Midway's current financial situation as one that "arises out of a series of disastrous and ill-advised financial transactions that largely occurred during 2008," further positing that Midway's board "either approved of the transactions or, upon learning of them, looked the other way -- taking no steps to investigate and unwind them." According to the report, Redstone's now famous infamous sale of Midway to Mark Thomas for only $100,000 was an effort to obtain a "massive tax refund," sacrificing Midway in the process. Finally, the suit states that Midway, as a company, has been "insolvent" since some time in late 2007 and its board of directors simply turned a blind eye, allowing the company to sink further into debt.Oh, and Frank from legal? Your wife wants you home. She knows you've been pretending to go to work for the last seven months.
Judge says Sumner Redstone treated Midway 'like a toy'
Embattled Midway is back in court, with creditors asking for the head of majority stockholder (and mystery man) Mark Thomas. And Judge Kevin Gross seems inclined to side with the creditors, as bankruptcy proceedings go forward and he calls out former Midway owner National Amusements, Inc. (and it's owner, Sumner Redstone) for treating Midway "like it was a toy." As the publisher's set to run out of money by June, various creditors are in court fighting over the company's remaining assets and, in the process, Judge Gross is reviewing the somewhat dubious sale of Midway to the aforementioned Mark Thomas. To help put the court proceedings into perspective, we contacted Joystiq Law of the Game writer (and total lawyer) Mark Methenitis, who said, "The Midway sale circumstances are the type of facts that often make a court suspicious. Even though NAI's business justification of the sale does seemingly make sense, the sale of a company that size with debts that large for a net amount so small is suspicious to say the least." There's only a few months left until June so we're sure to see the results of this bankruptcy case play out in no time at all. Here's hoping the one profitable team at Midway can save themselves before the whole ship sinks.
Sumner Redstone appeals Midway sale subpoena, delays deposition
Yesterday, Sumner Redstone was due in a Manhattan court to speak in regards to the sale of Midway to Mark Thomas. That never happened, but Sumner and business partner Robert Steele's attornies did appear in a Bankruptcy court in Delaware on Friday in an attempt to get out of the scheduled deposition, Game Politics reports. As a result, Sumner will now be required to appear this upcoming Friday.Curious is the lack of his daughter, Shari, in any of the proceedings on Friday. She was due to appear in Manhattan last Thursday, March 19th, for her deposition.
Former Midway execs subpoenaed over company sale
Looks like the long arm of the law finally caught up to the Redstones, as Sumner and his daughter Shari have both been subpoenaed by the U.S. Bankruptcy Court, District of Massachusetts, regarding Sumner selling his stake in Midway to Mark Thomas. Both of the Redstones must appear in a New York court later this month for deposition and will provide physical and electronically-stored documents pertaining to the sale of Midway. For some odd reason, Mark Thomas hasn't been called. He bought Sumner's stake in the company for $100,000 and assumed $70 million in debt in doing so, which is something we would assume the court would want to hear about.Speculation suggests that Mark took over the $70 million debt because $30 million of it was secured debt, meaning that it would be paid to Thomas before the bondholders, who are owed a total of $150 million by Midway. The subpoena document states: "The cash collateral order places a clear emphasis on insiders getting paid before and, potentially, at the expense of the estates and their creditors." If you want to read the document for yourself, click here (warning: pdf link).[Via Edge]
Midway clings to life after favorable court ruling
After throwing up the white flag last week, the U.S. Bankruptcy Court has granted Midway some some breathing room from creditors who are all but beating down the door for a piece of the embattled publisher. The ruling allows Midway to keep its doors open despite its ongoing financial crisis in order to continue paying employee expenses and pay back what the court describes as certain "critical vendors."Midway boss Matt Booty describes the court's decision as a key step in the company's "planned and orderly reorganization," though we're sure the words he was really looking for were complicated and terrifying. It's probably difficult to come up with the right thing to say after someone plunges an arm into your chest to remove your still-beating heart.
Midway creditors upset by possible insider dealing
Midway's bankruptcy proceeding has gotten even more dramatic, as accusations of fraudulent insider deals enter the mix. The full story gets very complicated, but the main issue involves the relationship between former Midway owner Sumner Redstone and the relatively unknown Mark Thomas, whom the billionaire sold his stake in Midway to for a paltry $100,000 last December.A motion has been filed on behalf of several Midway creditors asking: "Who is Mark Thomas?" and "Why did Redstone essentially gift the company to this man?" Given Thomas' current holdings in Midway, when money starts getting divided out to creditors from the bankruptcy proceedings, he is apparently set to make out like a bandit, ahead of the laundry list of others owed money.Source - Creditors Allege Shady Insider Dealing In Midway Bankruptcy [GamePolitics]Source - Guessing game over Mark Thomas vexes Midway Games' creditors [Chicago Tribune]PDF - Creditor motion, hosted by GamePolitics.
Redstone to sell Midway stake for $100K
The week begins with more bad news for financially-hobbled Midway. Just days after finding itself on the business end of a delisting notice from the New York Stock Exchange, the company's majority stockholder, Sumner Redstone, is now preparing to row away from the sinking ship entirely. According to the Wall Street Journal, Redstone and his holding company, National Amusements, hope the separation will help breathe new life into the firm's suffocating $1.6 billion in debt. Redstone is expected to inflict sell his 87% controlling stake in the troubled publisher to private investor Mark Thomas -- obviously someone who enjoys a good fixer-upper -- for the bargain basement price of about $100,000, or $0.0012 a share, well below Midway's previous closing price of .38 a share. The WSJ also points out that the sale is but one point in what has become a highlight reel of bad investments for Redstone, who sunk millions into Midway in hopes of the company's heroic return, only to see it do a fatality on his bank account.
Midway's losses tallied up under Sumner Redstone's watch
Following yesterday's public resignation of Midway CEO David Zucker (no, not that David Zucker), Variety crunched the video game publisher's numbers after media titan Sumner Redstone's acquisition of the company in 2004. At that time, Redstone said, "Midway is clearly a second-tier producer, but it has the potential to be in the first tier, and that's what attracted me to the company. You're going to see an enormous infusion of talent in the very near future." Some of that talent included designer Harvey Smith who had some less than encouraging things to say about Midway before unsurprisingly leaving the company last fall.So how has good ol' Sumner's investment in Midway panned out? According to Variety, Midway's net losses since 2004 are "about $300 million"; its "revenue growth from 2004 through 2007" is a particularly unimpressive -3%; the change in "Midway stock value from the day Redstone took over through today" is a costly -79%; and the total loss in "equity value for Sumner Redstone" is in excess of $500 million, an estimate Variety calls "very conservative." With $8 billion in net worth, $500 million might not sound like much but, trust us, you don't get to be #86 on Forbes list of top billionaires by letting that kind of coin go. Let's see if Shari Redstone can clean things up.
Midway elects to keep it in the fam, new board chair a Redstone
Daddy's little girl might not know Scorpion from Sub-Zero, but she's now Midway's Chair of the Board, succeeding Kenneth Cron who recently resigned. Daddy, of course, is none other than Sumner Redstone, the majority owner of Midway Games ... oh, and Viacom and CBS. Daughter Shari Redstone had been vice chair of all three companies before her promotion at Midway, which apparently will not affect the position or size of the other chairs she sometimes occupies, including the presidential throne of gran'daddy-founded National Amusements.Ms. Redstone has actually been at odds with her father as of late, but her election as chairwoman (with Sumner's flat endorsement) does suggest that the family feud has cooled a bit. Whether this cooling effect will have an inverse reaction on Midway (you know, like, heat it up) remains to be seen – but something needs to happen.
