chapter 11
Latest
Blockbuster files for Chapter 11 bankruptcy
This one's been expected and rumored for a long time. Now it's official: Blockbuster has initiated "pre-arranged" chapter 11 proceedings. Under the plan, Blockbuster's debt would be reduced from $1 billion to about $100 million when implemented. The press release states that Blockbuster is currently evaluating its US store portfolio as part of the recapitalization process. For the time being, all 3,000 stores will remain open. However, we've been told by a trusted tipster that up to 1,000 could be shed before things are said and done. Now make no mistake, Blockbuster is still open and wants you to know that it's business as usual during the restructuring -- the details of which you can read in the press release after the break.
Blockbuster filing for bankruptcy next month? Probably.
It's not official, but rumor that Blockbuster is preparing to file for bankruptcy in September is certainly believable. Expected even. According to several sources speaking to the Los Angeles Times, Blockbuster chief executive Jim Keyes along with representation from Blockbuster's senior debt holders met last week with the six major movie studios to announce the company's intention to enter a mid-September bankruptcy. Meetings that no doubt hoped to secure an uninterrupted flow of new content from Hollywood as Blockbuster restructures its $920 million in debt and closes another 500 of its 3,425 US stores. In its fight to remain relevant in the age of digital downloads / streaming, Blockbuster has lost $1.1 billion since early 2008. It's expected that Blockbuster's debt holders will likely own a substantial portion of the company when all is said and done. We call dibs on those Archos 10 netbooks.
Playlogic asks for mercy from court against creditors
Dutch publisher Playlogic (Fairytale Fights, Obscure: The Aftermath) has notified the US Securities and Exchange Commission that it has entered into "surseance van betaling," which is closely equivalent to the States' Chapter 11 bankruptcy. The company claims in the filing that "Tough market conditions, late payments by large customers and the delays in projects have forced the company to seek protection under the Dutch bankruptcy laws." According to GI.biz, Playlogic is suing distribution partner Koch Media for €1.7 million ($2.2M) in unpaid bills as it continues hemorrhaging money, after recording a $20 million loss in its previous fiscal year. For a company that stated just yesterday that it wasn't bankrupt, it's amazing what a difference a day makes.
iRex Technologies files for bankruptcy, partly due to US problems
It isn't throwing in the towel just yet, but things don't seem to be looking good for Netherlands-based iRex Technologies -- CEO Hans Brons has just announced that the company has been forced to file for Chapter 11 bankruptcy protection amid a string of problems that's led to "financial difficulties." While details are otherwise still pretty light, at least some of those problems seem to be related to the company's operations in the United States and, in particular, a delay in its DR 800 e-reader receiving FCC approval that caused iRex to miss out the holiday shopping season and fully take advantage of its deal with Best Buy. As bleak as things might be, however, Brons still seems to be keeping his chin up, saying that the "expectations are still positive."
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]
Cheyenne Mountain Entertainment sells off Stargate assets
It's a troubling day for an already-troubled studio, as Cheyenne Mountain Entertainment has sold off Stargate Resistance -- the third-person shooter title that was made to help keep the company afloat and fund further development of Stargate Worlds -- to a startup company called Fresh Start. Fresh Start is comprised of former Cheyenne Mountain Entertainment employees, which means that the title is still in the hands of its makers. Gamer/Law breaks down the recent events, and notes the salient details: that Fresh Start is in a joint venture agreement with CME to receive and run all of CME's assets (including Stargate Resistance), CME has the option to buy back these assets in the future, and there is no official word on Stargate Worlds. Gamer/Law speculates that there is either "some unpublicised arrangement has been entered into, or Cheyenne's Stargate MMO rights are an asset to be sold to satisfy creditors, or (possibly) Cheyenne has lost those rights following its entry into bankruptcy." If you haven't been following the long, painful saga of CME and Stargate Worlds, suffice to say that this promising MMO suffered from lack of employee pay, devs jumping ship, extensive layoffs, lawsuits, Chapter 11 bankruptcy, a vague suit brought against former CEO Gary Whiting, and the sudden shift from developing SGW to getting Stargate Resistance out the door. However, whether this latest development will be a positive one to offer hope for a SGW resurrection or the death knell for the game has yet to be seen.
Stargate: Resistance developer files for Chapter 11 bankruptcy
Stargate Worlds and Stargate: Resistance developer Cheyenne Mountain Entertainment has suffered the slings and arrows of economic turmoil for months now, leading to a number of unflattering reports about the company's finances. However, it seems the studio is taking steps to get itself back on the right track: A representative for Cheyenne recently announced on its official forums that the developer has filed for Chapter 11 bankruptcy. In the aforementioned forum post, the representative assured fans of the Stargate games that, should the bankruptcy filing be approved, that the company won't simply shut down while it restructures. He explained, "our entire staff is in-house working on upgrades and expansions for Stargate: Resistance, and we continue to be motivated and excited by the response we've received from our customers." We wish everyone the best of luck with turning the good ship Cheyenne back into more prosperous waters.
Nabaztag can't make RFID cool, has to file for bankruptcy
We always knew that any company courageous enough to take a technology designed to help mega-corps monitor their inventory levels and make it mainstream would face an uphill battle, but we never envisioned Nabaztag caving entirely to the pressure. If a snippet in a recent issue of Les Echos (a French financial paper) is to be believed, the creator of the rabbit-inspired Violet RFID Mirror has filed for bankruptcy, giving any company interested in keeping the brand alive until September 4th to toss out a cash infusion. Not like we're looking at you, Mr. VC, but we're definitely hoping to not be sobbing about this in just under a month. Tick, tock.[Voa Loic Le Meur]
Polymer Vision yields to bankruptcy, we bid Readius adieu
Ugh. Another one bites the gently gnashed rock particles, as they say. Polymer Vision, which was already having some pretty significant cash flow issues back in April, has reportedly caved under pressure and sought shelter under Chapter 11. According to the Hampshire Chronicle, the company famous for developing a bendable e-paper display has fittingly folded, leaving its 50 employees searching for new lines of work and millions of fans grasping for answers. The report continues to say that the promising (but oft delayed) Readius display isn't likely to ship in its current form, and now it seems that the future is quite murky for the company and its flagship product. Call us crazy, but if you're looking for an easy way into the e-paper market, you might be able to pick up whatever's left here for a song. Just sayin'.[Thanks, Charlie]
Psystar bounces back from Chapter 11, intros new high-end hardware
Everybody's favorite fuzzy little Apple clone maker is back from Chapter 11 bankruptcy protection (we're still waiting on that revelatory outing of creditors that Apple is so hungry for), and already has a new product in the offering. Psystar's new Open(7) hardware runs Intel Nehalem Xeon, which should provide a nice performance jolt to hackintosh land. Psystar is also going to start using a new bootloader called Darwin Universal Boot Loader, which will eventually be released to open source. Oh, and just in case you were wondering: a little bit of bankruptcy hasn't softened the company's confrontational spirit: Psystar says it's ready to "emerge and again battle Goliath," and that when "life gives you apples, make applesauce." It's kind of cute, really.[Via TUAW]
Psystar files for bankruptcy, anonymous creditors to be outed
We have mixed feelings about the news that Psystar is going under. On the one hand, it's wonderful having somebody attempt to create powerful, expandable Macs for cheap, on the other hand the company has been generally abrasive to the grassroots hacker community its work is based on, and pretty bombastic when it comes to Apple and "the law." But hey, everybody needs to make a profit, even companies being sued into oblivion by Apple, and the news of Psystar filing for Chapter 11 bankruptcy protection has interesting legal implications. Not only does it stall Apple's case against the company -- while implying a possibly inevitable defeat -- but Apple has long posited that a mystery investor behind Psystar has nefarious aims, and the bankruptcy hearing on June 5th will name the creditors behind the company. Our fingers are crossed for a "Dan Brown"-style conspiracy, but we're prepared to be "post-2002 Tom Hanks"-style disappointed.[Via SlashGear]
Psystar files for Chapter 11, tucks tail between legs
In the fight for the right to party sell unauthorized Mac clones, there may be a victor declared sooner rather than later -- if not legally, then fiscally. Psystar, which has been playing with fire for quite some time, recently hit a snag in its battle with Apple. The Mac Observer is reporting that Psystar has filed for bankruptcy in Florida on Thursday thereby slowing Apple's case against the Mac clone vendor. As TMO points out, this action seems to indicate that the financial supporters of Psystar are seeing the writing on the wall and believe Apple will likely be the victor in the legal battle for distribution rights of OS X-running Macintosh clones. One outcome of Psystar's decision to file Chapter 11 is that its equity creditors will be revealed, finally pulling the curtains off of the secret of who has the (possibly) deep pockets in Psystar's legal battle. Another outcome is that Apple's case against Psystar will be temporarily delayed as the bankruptcy proceedings require all other legal action involving Psystar to be put on hold. Currently Psystar is still selling its 'wares online, however, once the Federal judge presiding over the bankruptcy filing lifts the stay of legal actions, it is likely that Psystar will fold under the financial pressure. Psystar's chutzpah notwithstanding, the bankruptcy hearings are set to begin on June 5; stay tuned folks, this is still going to be messy. [via Twitter, a tip of the hat to @PaulKent!]
SGI name lives on after $42.5 million sale to Rackable Systems
As you know, Rackable Systems was originally hoping to acquire the one-time king of the 3D set for $25 million (with some speculating that even that was a bit much), but it looks like the bankruptcy judges had other plans. Now that the dust has settled (and a check has been cut for almost twice the original asking price) it looks like the two companies will finally merge, forming an outfit called... SGI. The newly minted Silicon Graphics International hopes to combine the strong server business of Rackable with the original Silicon Graphics Inc. name (and overseas service contracts), inspiring the same sort of technological alchemy that once brought the iconic brand to the silver screen by way of such fine cinematic fare as First Kid. In addition, SGI plans continued development and support for the existing Silicon Graphics and Rackable product lines. Quite frankly, we really don't care what they do, as long as they bring back the Indigo -- back in the day we would have killed for one of those bad boys.
Phoenix Motorcars undergoing restructuring, still committed to EV space
With proven success stories like Tesla struggling to keep those electric car dreams alive in today's economy, it's no shock to hear that at least one little guy (that'd be Phoenix Motorcars) has caved to the pressures. After reviving itself once already late last year by nailing down a partnership with the absolutely stunning state of Hawai'i, it seems the company hasn't been able to progress as planned with its intentions to bring EVs and an electric vehicle infrastructure to the island of Maui. According to a filing on April 27th, the flagging automaker has pegged the soft economy (surprise!) as well as a $5.3 million arbitration apparently won by former drivetrain supplier UQM as the main contributors to its demise. In an update to the situation, however, its CEO has replied to AutoblogGreen in order to reaffirm that it "has not abandoned the alternative fuels transportation space." Unfortunately, that could mean absolutely anything... or nothing at all.Read - Original filingRead - Update from Phoenix MC
SGI to sell itself for just $25m, throw huge sadness party
Man, the difference a few years decades makes. In the 90s, Silicon Graphics helped create silver screen mega-hits like Jurassic Park and Terminator 2, and in 1997, its fiscal year sales totaled $3.66 billion. Today, the company's mired in its second bankruptcy, which has occurred just three years after the first. In order to just terminate the dream before it gets any more nightmarish, SGI has announced plans to sell itself to Fremont-based Rackable Systems for a mere $25 million -- and some analysts are even concerned that the suitor here could be sinking its teeth into a sour deal. The agreement still has to be approved by a bankruptcy judge, and of course, there's still a few more inches of red tape to cut through, but we'll be sure to let you know when the fantasy ends and the wake begins.
Feds and creditors decry Midway's 'key employee incentive plan'
Like flies to honey, Midway can't seem to stop attracting controversy as it attempts to stay afloat during its "planned" bankruptcy phase. This time around, the besieged developer is coming under fire from its creditors and the government committee overseeing its bankruptcy proceedings for planning to dish out $3.755 million to 29 of its employees as part of a "key employee incentive plan."According to The Cut Scene, the bonuses were set up to reward the select employees (five of which are supposedly Midway executives) should they manage to sell the Wheelman and Mortal Kombat franchises. The feds and creditors took issue with these goals -- when the "incentive plan" was submitted, Wheelman had already been sold to Ubisoft. The incensed parties also took issue with attaching incentives to the sale of Mortal Kombat -- a duty mandated by Midway's "obligations under the Bankruptcy Code."There are other troublesome points in the plan, such as the fairly high amount of cash it would dispense -- cash that the owed creditors would like to see in their own coffers. Midway will reportedly file an updated (and likely less lucrative) version of the "incentive plan" before its public bankruptcy hearing tomorrow morning.Update: The revised "key incentive plan" was submitted by Midway last night and alters the previous plan in a few key ways. Midway CEO Matt Booty has been subtracted from the equation, leaving four out of 28 potential employees receiving bonuses, and of those 28, the bonus will be based on the amount of money various properties are sold at. The sale of the Wheelman property will no longer be considered as part of the bonus requirements and the Mortal Kombat franchise will only count if "all of its assets" are sold along with it. To read more about what has changed, check out The Cut Scene.
Dear former Midway employee asking about unpaid wages, here's your answer:
Let's start off by assuring you that if you're a current or ex-employee of a company sending us information: A) We won't reveal your name if you ask to stay anonymous; and B) You really should leave a working return email address. As to the matter at hand, we have received a request for legal advice from an alleged former employee of Midway, who writes:"Those impacted by the recent lay off seem to have lost their PTO (earned vacation days). Class action law suit may be pending. Getting 2 months paid leave of absence was really nice, but that was required by law (the Mitchell Act) requiring 60 days notice for mass layoffs. After receiving a letter in the final week stating that the accrued PTO was NOT to be received in the final check, but in the following pay period, Midway declared Chapter 11 and evidently sent a subsequent letter stating that the PTO would not be paid at all. Evidently this is pretty common with bankruptcy. Is there a class-action lawsuit that people can join or should we all just file a claim in small claims court?"Lucky for you, we've got a talented lawyer (and LGJ columnist) on staff, Mark Methenitis. Read Mark's response after the break.
Charter Communications to file for bankruptcy
Okay, so we hate to be blunt, but if there was one cable carrier out there just waiting to crash, it was Charter. The company famous for engaging in less-than-forthright contest practices and perpetually finding ways to perturb subscribers has just announced that a Chapter 11 filing isn't too far away. In fact, a recent press release makes clear that it "intends to implement its financial restructuring through a Chapter 11 filing to be initiated on or before April 1, 2009." As per the agreement, all debt holders will reportedly be paid in full, with Paul Allen keeping the largest voting interest in the company. Of course, shareholders' stake in the company will be canceled, but the decision will supposedly reduce debt by around $8 billion. As expected, the company has assured subscribers that its services will continue to operate throughout the debt restructuring process, but we wouldn't expect service to get any better in the coming months.[Via AP, thanks Vanbrothers]
Midway files for Chapter 11
Midway has filed for Chapter 11 bankruptcy today, but, see, it's okay, because it's all part of the plan. Newly appointed CEO, Matt Booty, says filing for Chapter 11 was "a difficult but necessary decision." He also noted Midway has been "focused on realigning our operations and improving our execution" and that filing for Chapter 11 will allow the company some relief from "immediate pressure from our creditors." To Booty, Chapter 11 is nothing more than the "next logical step in an ongoing process to address our capital structure."Midway expects to be able to run the company as usual, and even filed a variety of First Day Motions to that end. The court is usually lenient with these Motions and often grants them, so this should give Midway some time to finish up that next Mortal Kombat game and maybe get out of the red.
Circuit City closings begin, lines form, bargains await
If you were waiting to get some fliers in the mail announcing the beginning of clearances at your local Circuit City, we're sorry to report you've probably already missed the best deals. The liquidation was just made official last week, but, when Christen over at Gadget Review happened by the trendy Santa Monica branch of the doomed franchise yesterday, he found lines of people already waiting for their chance get in on the "everything must go" action. It looks like the crowds were somewhat contrived, as sales associates were making people wait outside before going in, but just the same you might want to bundle up before heading out for bargain hunting today.
