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Objections Made By Creditors And Trustees In THQ Bankruptcy Sale
As many of you know, THQ filed for Chapter 11, and its intention was to be sold to Clearlake Capital Group. However, pretty complicated legal objections made by creditors and trustees have complicated this sale.
The legal lingo involved is somewhat difficult to anyone not in the know, but here’s the general idea: some parties involved in all of this object to the 30-day window of THQ’s sale. The problem here is that the window is too small to give other companies an opportunity to offer a bid. In addition, US Trustee Roberta DeAngelis objects with THQ’s plans to just give Clearlake $2.5 million in the scenario that another company ended up winning the bid. According to DeAngelis’s legal filing, that amount of money is too much for this kind of sale.
But wait! There’s more! According to a report by Distressed Debt Investing (heh), an association of THQ creditors, known as the Ad Hoc Committee of Convertible Noteholders, has filed a complaint against THQ. The complaints states that instead of focusing on paying back its debts, THQ’s filings have focused too much on making sure the company remains in operation. According to this quote, “During this ‘process,’ the Debtors and their advisors focused their attention on contacting ‘growth-oriented’ financial investors (i.e., venture capital and private equity firms) and, by marketing the company as a whole, effectively precluded strategic investors from participating in a sale process. The financial investors that the Debtors and their advisors did approach included only a few firms known for ‘distressed’ investing, which likely further hindered the process.”
Good job, THQ!