US bankruptcy court approves use of cash for continued operations; bondholders file formal objection over mystery buyer's dealings as New York market ceases trading shares of publisher.
Today, a US bankruptcy court in the district of Delaware has given Midway Games permission to use its remaining cash reserves to continue day-to-day operations. The ruling comes several days after the Chicago-based company filed for Chapter 11 bankruptcy protection after defaulting on a deadline to repay more than $240 million in debt.
"Approval of these motions is an important first step in this planned and orderly reorganization, enabling Midway to continue to operate as usual during this process," said Midway Chairman and CEO Matt Booty. "We remain confident in Midway's ability to use this proven process to address our capital structure and explore our strategic alternatives."
The bankruptcy court's approval comes just days after Midway's stock was delisted from the New York Stock Exchange. Late Friday, the market's regulatory board announced that it had "determined that the common stock of Midway Games Inc. [ticker symbol MWY] should be suspended immediately." The company was served with a delisting notice last November after its share price dropped below $1.
Also on Friday, the Chicago Tribune reported that many holders of Midway's debt filed a formal objection in the same bankruptcy court. The objection claims that the bankruptcy filing, which will let Midway postpone and possibly even cancel some debt repayments, is "tainted by highly unusual transactions by insiders...that, to put it charitably, require significant scrutiny."
The bondholders' objection takes particular exception with last November's "change in ownership," when then-majority stockholder Sumner Redstone sold off his 87 percent stake in the company--valued at $30 million--for $100,000. According to the Tribune, the objection singles out the fact that the buyer, Mark Thomas, might "reap an enormous, almost unprecedented windfall" if Midway is sold for even a small portion of its former worth. Given its catalog of gaming properties, such a sale is more than likely; the company is already widely rumored to have hocked its Wheelman game to Ubisoft.
The bondholders want Thomas to provide more information about his relationship to Redstone and the reasons for the exchange. However, the mysterious financier has taken the complete opposite tack, withholding even the most basic information from Midway shareholders, including his employment history and place of residence.
"It's a very unusual situation," said bondholder attorney Greg Bray. "We're all curious."
maybe he sold his shares twice offically and unoffically mk series are the best that were not created for pc games. thanks for everything midway ..... now midway go and win the real figth
hmmm.... lots of midway fans in here that dont seem to like it if you dont praise their company cuz all the pluses for comments are for praise and all the minuses r for critisim. Face it midway is a good company, but they just dont have what it takes at the moment, they need to rethink some things to compete with the other companies.
whiskeyandrye has a point. The majority shareholder tends to have a lot of voting power at such meetings. It's how that power is utilized that can be disgusting at times. Make of this story (and the linked Chicago Tribune article) what you will. To me, something smells...
If this guy owned 87 percent of the company, he can pretty much do whatever he likes with it. The stock is his possession, and can be sold over the market at whatever price he feels like. The hyperlink explains a lot of the 'why' if not the how, but either way, worst case scenario the decision to sell would be put to a vote between the shareholders and 87% of the vote would go Summer Redstone's way.
what i don't get, is how board allowed the company owner to sell his stock at such a low price. aren't there people in place to prevent these kinds of shinnanigans?
wont miss midway. never liked their b-ball games, mortal kombat, or their arcade shooters. finish them!
I'm gonna miss midway :(, I hope somehow they manage to survive!! I was looking forward to wheelman, this is vegas, and some new characters for MK vs DC in the form of DLC!!!!
I just rented MK Vs DC. There was no way I was going to buy it cause, let's face it, Midway and MK hasn't impressed anone in YEARS. But, you know what? I thougt that was one of the best MKs I've played, and now I genuinely feel bad that their final effort was met with a bankruptcy. Too little, too late... I guess.
ooo and making games off of celebs? are you kidding me? movies are for them, games are for us so 50 and Disel, get out of our world you money hungry savages. Specially 50, you guys heard the storyline for that? Stop pretending your some elite force, your just a bunch of street thugs, serve in the military and then we'll see if your still high up on yourself
Midway quality has been downgrading for a long time now, this doesnt surprise me at all. They have such good ideas, but dont ever seem to finish the job right
So what this means is everything Midway puts out from here on out has to be beyond outstanding. I'd start with dropping the wheelman out of the lineup and get serious.
I like their games, so I hope they stay around. But I doubt they will close down so who really cares how they are financially.
Well as long as they release the games they have said will come soon im good. If Wheelman goes to Ubisoft, im ok with that because Ubisoft is a great company
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