Troubled Waters Surround THQ Sale
With many THQ fans here in Pixel Judge, we have intensively been following the THQ sale, it was previously reported that Clearlake Capital Group would be buying THQ but would not actually be changing anything within the company. In simpler terms, Clearlake Capital Group would then be picking up THQ's debts so that in return in the long run, they would continue to earn a part of the profits from future THQ games.
While few can argue that this is a bad deal, in fact THQ probably considered themselves very lucky to find such a purchaser, not to mention this avoids the need for THQ to sell off each franchise and split up their company. There are those who have objections to the sale.
A website tracking the bankruptcy of THQ, Distressed Debt Investing, has reported that Roberta DeAngelis, the US trustee who is overseeing the THQ bankruptcy has objections.
The objections are as followed:
- The timing of the sale is too short and thus means that only Clearlake Capital Group can purchase THQ
- If Clearlake does not get the purchase, the "break-up fee and expense reimbursements" (2 million US Dollars) are disproportionate to the cash portion of the purchase price (6.65 million)
- The current minimum bidding price is too high and should be proportionate to the cash portion of the purchase price
- The break-up fee itself is being treated as a "superiority admin expense" which is not allowed under US Bankruptcy Code
- The current bidding procedures only allow a small subset of people to attend it, while the law states that the auction must be conducted openly and all creditors must be allowed to attend
In addition to her objections, a group of THQ's creditors have also filled objections, mostly relating to the fact that the current process is designed to eliminate the opportunity for anyone else to purchase THQ.
Overall, it seems like quite the legal mess. While it is easy to understand why THQ is trying to get their company purchased only by Clearlake Capital Group, as it would guarantee they get to continue running as they are now without having to split up the company, fire people or sell franchises. It also is not fully within the law though, so it will be interesting to see what the hearing scheduled for today will bring as a result.