Chicago – Warner Bros. (NYSE: TWX) $33 million bid to buy "substantially all" the assets of Midway Games (NYSE: MWY) looks like its close to being approved. A Delaware bankruptcy judge said Wednesday that the objections to the Warner Bros. deal were resolved, clearing the way for the company to change owners, according to Chicago Tribune.
But under pressure and with depositions flying in bankruptcy court, Mark Thomas has spoken. He was even kind enough to provide his resume.
So who is Mark Thomas? A lawyer, did both undergrad and law school at U Alabama. No prior experience in videogames, the closest he comes to the industry is some work in the casino business, a wholly different sort of gaming.
Mark told the court he never met either Sumner or Shari Redstone prior to November 14, 2008, and was approached about the sale via lawyers.
Still no word on how out of everyone in the universe Mark was chosen for such a sweetheart deal. Mark's full statement below:
Creditors have been complaining there was something fishy in the circumstances surrounding the death of Midway Games (once MWY, now delisted).
Maybe now they'll get some answers: Sumner Redstone (and his daughter Shari too) have been subpoenaed in US Bankruptcy Court to explain the nature of their relationship with new Midway Games owner Mark Thomas.
To recap, in December Sumner sold his 87% stake in Midway to Thomas for the piddling sum of $100,000 plus debt. The move set off a series of debt covenants allowing Midway's creditors to demand immediate repayment on $150 million the company owed. Predictably, the company when bankrupt shortly ahead of the debt's due date.
But it turns out Mark Thomas -- a man with no background in the gaming industry -- has "preferred debt" as part of his deal with Sumner. Midway's other creditors charge that could mean Thomas could conceivably turn his $100K investment into a $30 million payout (money coming out of their pockets) as Midway executives find a buyer for the Mortal Kombat IP, valued at up to $40 million.
Why did Mark Thomas get such a sweetheart deal? What's his relationship to Sumner and Shari Redstone? Did the deal violate the rights of Midway's other creditors?
That's what lawyers want to know. Specifically, Shari is commanded to hand over:
"All COMMUNICATIONS YOU had with anyone CONCERNING the REDSTONE-THOMAS transaction." "All COMMUNICATIONS between YOU and YOUR representatives and Mark Thomas and/or his representatives." "All COMMUNICATIONS between YOU or YOUR representatives and the THOMAS PARTIES and/or representatives." "All DOCUMENTS and/or COMMUNICATIONS REGARDING any due diligence and/or investigation that YOU and/or YOUR representatives performed on Mark Thomas and/or the THOMAS PARTIES."
Sumner and Shari will be deposed on March 19 at a private law firm in New York. Stay tuned.
In business, as in dating, you don't want to seem too eager. But in business, as in dating, you can easily overdo it.
Seems to us bankrupt Midway Games (once "MWY", now delisted) is overdoing it. In an interview with MTV today, a Midway spokesman says this of Mortal Kombat, the company's last asset:
“It’s not our goal to sell ‘Mortal Kombat,’” Midway spokesperson Geoff Mogilner told me. “It is something that, in the world of scenarios, it is something that could happen here. But it’s not something that we as a company are going for.”
There's no bluffing this one, Midway. The executive bonus arrangement is in the public domain, everyone can see your hand. So please drop the pretense you're ambivalent towards a deal and get something done.
As if things with the recent demise of Midway Games (MWY, delisted) weren't shady enough: There's already suspicion of self-dealing in a fishy deal between former majority shareholder Sumner Redstone and new owner Mark Thomas, a man with no prior experience in the gaming industry.
Now kotaku finds out that Midway's remaining employees, after explicitly being told that surplus personal time off would be paid out, are now being told to take a number along with the rest of Midway's creditors.
Why screw employees? Well, Midway is scrounging up its pennies for an incentive package for 29 executives to make sure the company's remaining assets -- basically the Mortal Kombat IP -- gets sold. Midway filed in bankruptcy court a plan to:
Milestone: Entry into a publishing/distribution agreement for Midway’s new “Wheelman” game (apparently already accomplished), performance by Midway entitling it to gross proceeds of $6 million under the agreement by March 1, 2009, and actual receipt of those proceeds. Bonus Amount: $497,500.
Milestone: Either (i) execution of an asset purchase agreement for the sale of Midway’s Mortal Kombat franchise assets or (ii) submission by Midway of a plan of reorganization to continue as a going concern. Bonus Amount: $1,292,500.
Milestone: The earlier to occur of (i) confirmation of a plan of reorganization or liquidation or (ii) closing of a sale of Midway’s Mortal Kombat franchise assets. Bonus Amount: $1,965,000.
Wheelman has already been offloaded to French gaming company Ubisoft (UBI).
But Mortal Kombat is still in play, and given the recent success of the 'DC Unvierse' cross-over game, the franchise still has legs. So, who will buy it?
In January I predicted (see Notable Bankruptcies of 2009: Q1) that “major” bankruptcies in 2009 would challenge the 383 mark set in 2001 (the high-water mark after the dotcom bubble). I even suggested that it was possible that we could exceed 400 “major” bankruptcies in 2009.[More...]
In January I predicted (see Notable Bankruptcies of 2009: Q1) that “major” bankruptcies in 2009 would challenge the 383 mark set in 2001 (the high-water mark after the dotcom bubble). I even suggested that it was possible that we could exceed 400 “major” bankruptcies in 2009. According to Bankruptcydata.com, there have been 156 “major” filings thus far in 2009. Assuming that bankruptcies are equally distributed throughout the year, this puts us on pace for 312 bankruptcies. That is tracking well shy of my prediction. In fact, bankruptcies were down significantly from Q1 to Q2, as there were 90 bankruptcies in the first quarter but only 66 in the second. That stylized fact begs the question: Is that a “green shoot”[More...]
In January I predicted (see Notable Bankruptcies of 2008) that “major” bankruptcies in 2009 would challenge the 383 mark set in 2001 (the high-water mark after the dotcom bubble). I even suggested that it was possible that we could exceed 400 “major” bankruptcies in 2009. According to Bankruptcydata.com, there have been 90 “major” filings thus far in 2009. Assuming that bankruptcies are equally distributed throughout the year, this puts us on pace for 360 bankruptcies. I fully expect the filing pace to quicken as the year goes on, and as the economy continues to deteriorate. Below you can find an updated list of what I see as the “noteworthy” bankruptcies of 2009, as reported by <a[More...]
There has been a lot of talk lately whether video game industry is really recession proof or not. The debate has been made particularly interesting by conflicting signals emerging in last few days.[More...]
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Creditors to bankrupt Midway Games are hopping mad over 
Creditors have been complaining there was something fishy in the circumstances surrounding the death of Midway Games (once MWY, now delisted).
In business, as in dating, you don't want to seem too eager. But in business, as in dating, you can easily overdo it.
