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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]
The rest of Midway is up for auction
Apparently, struggling publisher Midway has more than just Warner Bros. bidding on its remaining assets. After last week's announcement of WB's $33 million dollar offer to acquire the lion's share of Midway's properties, Midway released a statement today detailing the process and, in so many words, is allowing for larger bids. "Midway recently announced a stalking horse asset purchase agreement, which is expected to receive court approval, subject to higher or better bids, in a hearing on June 2, 2009," reads the statement. Additionally, all remaining assets owned by Midway are available for bidding as well -- including the TNA Wrestling franchise not included in the WB bid -- until the court-supervised auction takes place on June 29th.Midway's Geoff Mogilner told Joystiq this afternoon that today's release "doesn't change that agreement [with WB]" and either side will suffer financial penalties for backing out. He also noted that the acquisition has no effect on the development teams employed by Midway as "people aren't assets." Yet, Geoff. Yet. Seriously though, he told us that any bidder wishing to acquire development teams would have to engage in a "separate acquisition" and any winning bidder on Midway's assets won't take on any of the massive debt the company is currently weighed down by. He also noted that the recipient(s) of the money from this auction have yet to be decided. Standing in line for a payout are a laundry list of creditors along with mystery man Mark Thomas.
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.
Midway's money almost all the way gone
A US bankruptcy court document filed by Midway owner Mark Thomas (whoever that is!) reveals some dire information about the publisher that helps us understand how the mysterious Thomas was able to acquire the company for $100,000.According to GamePolitics' summary of the document, "Midway will run out of cash in late June," having "operated at a loss for most of the last decade. In addition, the publisher "overstated the value of the Mortal Kombat franchise." CitiGroup attempted, and failed, to find a buyer for Midway, which meant that Thomas had little or no competition. All of this information is just what hasn't been redacted in the document. We assume that the redacted portions deal with the fact that Sinistar is real and that Midway has been exhausting its cash reserves to mine Sinisite in order to make Sinibombs.
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]
[Insert new headline about Midway losing money here]
[From the Joystiq accounting department: In an effort to conserve funds in these tough times, we've cobbled together this story about Midway losing money from fragments of other stories about Midway losing money, with a minimum of editing and the small bit of news bolded. Thank you for your patience during these trying times.]As pillars continue to topple all around Midway, the company has begun to search for new ways to [1] plan for survival in its continuing struggle to keep its head above water [2]. But for every small chance at redemption Midway Games finds, there seems to be another piece of bad news hiding around the corner. The latest nugget of news is that [3] budgets estimate that between February 9 and May 4, Midway will spend $12,392,598, an approximately 75% depletion of its reserves.Midway owner ... relatively unknown Mark Thomas [4] says "Midway is hemorrhaging cash at an alarming rate," though we're sure the words he was really looking for were complicated and terrifying [5]. When things are going south as quickly as they have gone for Midway, you take your victories where you can [6], they have already shipped 1.8 million copies of Mortal Kombat vs. DC Universe! [7]
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.
