Faced with $240 million debt deadline, the once-mighty Mortal Kombat maker files for Chapter 11 protection; Mortal Kombat vs. DC shipments near 2 million.
After months of slowly twisting in the financial wind, Midway Games has finally filed for bankruptcy. The Chicago-based publisher today submitted a petition in a federal bankruptcy court in Delaware to seek protection under Chapter 11 of the US Bankruptcy Code. The company blamed the move on 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.
"This was a difficult but necessary decision," Midway chairman, president, and CEO Matt Booty said in a statement. "We have been focused on realigning our operations and improving our execution, and this filing will relieve the immediate pressure from our creditors and provide us time for an orderly exploration of our strategic alternatives. This Chapter 11 filing is the next logical step in an ongoing process to address our capital structure."
Today's move will allow Midway to reorganize to pay off its creditors, to which the company owes $240 million--or $72.5 million more than the company's $167.5 million in total assets as of September 2008. Currently, the company's worth is substantially more, as it has now shipped (not sold) nearly 2 million copies of Mortal Kombat vs. DC Universe. The publisher also played up the fact that its TNA Impact title also shipped more than 1 million units, and its Game Party franchise had sold more than 3 million units as of the end of 2008. Its overhead has been drastically decreased as well, after the company announced last December its plans to lay off 25 percent of its workforce.
Though today's filing might sound final to the layman, Midway's bankruptcy is actually a beginning, not an ending. "These filings tend to be fairly drawn out and slow-moving, and business can take place normally while the bankruptcy proceeds play out, so I would expect any games coming out over the next 2-3 months to be safe, so that would include the Wheelman launch," Signal Hill analyst Todd Greenwald told GameSpot. "As for whether the company can recover long-term, I certainly hope so, but can't say with any certainty. The fact that Eidos is getting a bid from Square Enix is potentially a good sign, though. "
Wedbush Morgan's Michael Pachter was similarly upbeat about Midway's ultimate fate. "The creditors will decide, but my guess is that Midway recapitalizes (the creditors turn debt into stock), and gets some new financing so that it can either recover or be sold," he explained. "A going concern is worth a lot more than a liquidation, given that the key talent will leave if the company is liquidated. Look at Acclaim, 3DO and Interplay, where there was nothing left after liquidation, and contrast with Eidos, which has a bid for £84 million on the table. The creditors have to realize that they can collect $100 million plus if they can get this thing turned around."
Is this the same company that in the 80's was initially called 'Bally Midway' cos if it is, its a real damn shame!
There Is one way to handle the bankruptcy problem these days I believe. Start out small, make some good games, and if your hurting financally(sp?) merge with a bigger company so this will not happen. Case in point:HP bought out Compaq;although there are still Compaq computers available, it's an HP company. Anyways, there's my rant.
they filed for bankruptcy after releasing Mortal Kombat vs. DC Universe and TNA Impact, a good move i think so that the payoff of those that will be sold will finance the debt and later operations cost. just when i thought they are making a come back with latest MK game.
A sign of the times...We'll probably, unfortunantely, see more of these. It's not a good time to be a big company. Boom and bust.
I knew the were going to go bankrupt. All their games are rubbish and don't satisfy me in the slightist. Their only decent game was stranglehold, but even that was rubbish.
Here's a list of companies Midway owes money to: * Wells Fargo Bank - $150,000,000 * Acquisition Holdings Subsidiary - $40,000,000 unsecured loan (Thomas is the mystery man who purchased Midway late in 2008) * National Amusements, Inc. - $20,147,864 * NBA Properties, Inc. - $17,294,849 (License/royalty settlement) * Tangible Media, Inc. - $8,675,954 * Warner Bros. Interactive - $6,654,203 * Artificial Mind & Movement - $2,000,000 * Epic Games - $1,975,000 (License/Royalties) * Walmart - $1,576,035 * Far Sight Technologies - $1,279,151 * Best Buy - $1,114,036 * Target - $934,156 * Technicolor Video Services - $637,769 * Toys R Us - $615,276 * Ditan/Synergex Canada - $578,316 * CBS Outernet - $314,600 * David Zucker - $300,000 (severance pay) * Multi Packaging Solutions - $287,036 * A.A.F.E.S Headquarters - $276,314 * Kmart - $218,497 * Tigon Studios - $200,000(license/royalties) * Hollywood Entertainment - $190,982 * TNA Entertainment - $160,000 (license/royalties) * Professional Films, Inc. - $150,000 * Synergex - Latin America - $149,027 * Pioneer.JB Marketing - $133,353 * Eclipse Advertising - $132,687 * GameStop - $127,250 * Sear, Roebuck - $125,495
That's because all the garbage they've been putting out lately. They were great back in the SNES era though.
I guarentee you EA will try to buy them out, the last good Midway game was MK Armageddon, I so hope we still get Gauntlet DS :(
its been a while since i bought a midway game which i actually enjoyed, that said i haven't played the new mk game, hopefully a sale or split will work positively for us gamers. if it goes the way of ensemble we will see several smaller studios and some fresh ip's
Well if Midway ever have to Close down(Which i hope not) and their Licences having to be Bought i Hope Namco who do the Tekken & Soul Series buys Mortal kombat That way itsi n the Hands of a Good Developer who know how to make a good Fighting game. And it keeps EA's Hands off it. Since we all know what happened to Westwood and Poor Bullfrog and their Dungeon Keeper Series. God Bless that game we will never see a Third. But anyway These are hard times for everyone with the current Money crysis and such. Let Hope Midway Doesnt Give in. MK Vs DC was a Big Sucess for them.
Its a shame that big players in the industry and going under while companies like EA stay afloat by devouering all in their path.... i dont normally have a problem with large companies as such but the way they do business is unfriendly at best..... anyhoo, i hope Midway makes a good recovery.... would be a shame to have their IPs sold off in the same manner as other dead companies, Interplay being the foremost in my mind..... had they survived we'd all have played Fallout 3 much sooner and other amazing IP's wouldnt be dead just now!
Krusnikzero2 draws an interesting parallel to the Atari era...I'm certain he didn't intend to, but it still rings true. "If developers take this as a sign that quality over quantity is the way to succeed in the gaming industry, gaming can look forward to a bright future." No more true words were ever spoken here. Fact is though, everyone around the US is hurting. It is going to be a fight to defeat the "crapware for $10, who gives a rat's ass" mentality. Let's see how things work out, shall we? Let the devs cannibalize among themselves, and see who's on top at the end. I can see Midway recovering, but it'll take some effort, and good games to publish. I've always been fascinated by crossovers, so I might see what MK vs. DC has to offer. I am hopeful. Good luck Midway.
i'm sure they could ask blizzard for a loan. heck blizzard could probably bail out the whole gaming industry and still have spare change.
Miday could save itself if they decide to build the company again after all this. The game that could save them would be probably a new Hydro Thunder. It was excellent at the time, and if they mustered up everything that new engines can dish out now, they'd have a blockbuster game. That's just my opinion, cause I know I'd buy it.
they drooped crap games since mk3. midway you had many chances and the people have spoken. your TRASH!
Midway deserves better. They have a great legacy, they still have most of their key talent. They just lost their way after the US arcades collapsed. Hopefully they can pull a turnaround like Majesco and Atari did. Barring a turnaround, maybe Square Enix or Namco will come to the rescue. SE is apparently in the process of buying Eidos; anything's possible. These are sad times we live in indeed.
Quite the journey. Midway went from creating super hits and excellent arcade in the 90s to release nothing but a steady supply of mediocracy. Of course I hope a few of Midway's franchises can be saved, After all, an acquisition by a larger company might be the future of Midway.
If they would only do what most of us here have already told them "REMAKE THE ORIGINAL'S, Make a New NBA Jam and a New Shadowhearts" Then they would easily come back. I wish Midway Well because they were great developers. I hope they will be able to regain ground and bring a new MK game using the engine from MK: Trilogy instead of the new stuff.
I just rented MK Vs DC cause let's face it, MK sucked for years now. But, I'm actually impressed.It's been a lot of fun so far. It's ashame that Midway finally managed to entertain me, and this is happining simultaneously. I guess I can say, "Too little, too late".
the game remakes will definitly help those in need , midway have great games , but they died in the 90's
Well they''ve already bankrupted the Mortal Kombat franchise, so I guess this is the next logical step.
Its a shame so many people are loosing their jobs in this industry these days. But if one good thing is to come out of these hard time I hope that some of this industry's fat will be cut away. There are a lot of developers out there who have continued to do business by clinging to the coat tails of their past success, not by creating anything original or unique. Midway is one such example. If developers take this as a sign that quality over quantity is the way to succeed in the gaming industry, gaming can look forward to a bright future.
wern't epic under their control as well or just the publisher? and yeah sucks for them but really they should of done what capcom has down with street fighter, kept it 2d, when it went 3d it went to s***.
What?! Companies can go bankrupt now???? I thought this company would just hop on the bailout wagon! haha
the reason why midway is going down like any other company is because they are bad at what they do, developing games.
The picture that says "Finish Him" in the article - I'm glad someone still appreciates irony. Thanks for that Gamespot.
What Mush_Mouth said is basically the truth. The economy is barely what to blame. Midway just...sucks. Even Mortal Kombat is terrible now (ever since MK3, its been a third-rate, unplayable mess of a fighting game). They're going down because they suck, so theres no reason to feel sorry for them...
[quote="Tor Thorsen - GameSpot"]Sumner Redstone sold off his 87 percent stake in the company--valued at $30 million--for $100,000.[/quote] That was what really sealed the deal there. Redstone sold his shares for approximately 0.03% of its actual market value at the time. At that point (I assume - not a trade professional) every other share in the company is set to a similar value, bringing the worth of the company down with it. Redstone sabataged the company when he left. IMO - The people left at Midway should try to find a way to put the companies debt in his hands. I'm not sure what were the personal reasons behind this move and maybe Redstone is really the good guy here, but he completely ruined the company with that sale.
to darth_nater: when a company files bankrupcy (someone else correct me if i'm wrong) is when the government clears their debt, it still will close down if they don't come up with the capital but as it says the processing takes time so they got 2-3 months, so hopefully they won't close down.
Gold Prevalence is right - The way I see it, people are less likely to take risks on purchases these days, whether buying it's a car, lending a customer money (as a bank), or even buying a videogame. And putting out games that people aren't going to immediately know are going to be at least decent, is going to kill your sales in an economy like this. I mean, good games still sell really well - look at the blockbusters that came out last year, and it's very likely that SF IV and RE 5 are going to kill in sales this year as well. Good products of any kind still sell really well if they're reasonably priced and marketed well enough. The economy's correcting itself by crappy companies failing and either going out of business or being bought by more successful companies - that's how capitalism works. The bad business fail, the good businesses thrive. People will find new jobs or create their own jobs - that's been happening for years and years. Honestly, I think this is a really good thing for the gaming industry because this means that the companies who mostly put out crap, like Midway and Sega, are going to have to actually try making good games again.
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