THQ Lenders Object To Speed Of Asset Sales

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THQLast month, THQ filed Chapter 11 Bankruptcy after posting extreme losses in the third quarter of 2012. Under Chapter 11, THQ was to continue working in their normal manner while they found a buyer for their US assets. Clearlake Capital Group was brought in to ensure a minimum bid. This is called a stalking horse offer.

The stalking horse offer was there to make sure of a minimum bid. However, THQ then claimed to be running out of money, and sped up the selling process. This resulted in Clearlake getting a hold of the assets. Some lenders didn’t take to kindly to this, and have raised an objection to the US Bankruptcy Court in Delaware. The lenders believe that the accelerated selling process led to an unfair bid which didn’t maximize the value of the sale.

The document itself can be found here, but essentially it seems that the objectors care most about the IPs themselves. Specifically mentioned are Saints Row, Darksiders, Company of Heroes and THQ’s third-party developed titles Metro and Homefront.

Here’s where the story gets interesting.

The entire problem seems to lie in a Game of Thrones-esque story of backstabbing and betrayal. The lenders name this group of evil the “Jasons” (Jason Rubin and Jason Kay, the current President and Chief Strategy Officer of THQ respectively). Both Jasons found their way into THQ around June of 2012, replaced the staff and “took over” in order to get a hold of these IPs with the eventual idea of placing it in Clearlake’s power, and therefore in their own.

Promptly after the Jasons “took over,” they immediately began to bring in their own “team” and phase out key members of former management. On June 11, 2012, less than two(2) weeks after the Debtors hired Rubin, the Debtors engaged Centerview Partners, LLC(“Centerview”) “with the primary goal of finding an investor that would provide new liquidity to fund the Debtors’ business plan, or a buyer for substantially all of the Debtors’ assets….”

Now it would probably take a fully qualified legal reading lawyer of some sort to understand all this (of which I’m not), but they seem to lay it out quite plain and simply. According to these lenders claims, the fall of THQ may not have been preventable, but the events that have transpired were planned to come out just this way.

On October 26, 2012, the Debtors and Clearlake agreed to the terms of a deal. As soon as it became clear that Clearlake was interested in purchasing the Debtors “as a whole,” as described below, it appears that THQ’s management and Centerview set the wheels in motion to manufacture a liquidity “crisis” which culminated in the Debtors’ chapter 11 filing and the expedited Bidding Procedures Motion.

Regardless, what’s left of the THQ stock closed on Friday 70% up (at a whopping 0.29 stock price). THQ, with all the madness that is going on, will certainly remain on the front page for some time to come.

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Will Aycock
Part Vet, part gamer, all awesome. Check out my Backlog above (click my name) or find me on Steam or Live. Siziol and Siziolvec respectively.
Will Aycock

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