THQ creditors, US Trustee take issue with quick sale

Committee of noteholders, Roberta DeAngelis not happy with publisher's expedited sale process or terms.


As part of THQ's bankruptcy declaration last month, the company revealed plans to sell itself to Clearwater Capital Group in 30 days for $60 million, subject to court approval. That approval has been contested, as THQ creditors and US Trustee Roberta DeAngelis have raised concerns regarding the publisher's expedited sale process and terms.

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Distressed Debt Investing reports that DeAngelis, who is overseeing the THQ bankruptcy filing, has entered an objection. Her claim states the timing of the sale (scheduled to be completed January 10) is being held in too short a window to allow interested parties to take part in the sale process. She also notes that fees and expense reimbursements due to Clearlake (estimated at $2.25 million) are "excessive" when compared to the total cash offer in the bid.

Some THQ creditors are similarly unhappy with THQ's expedited sale process and filed their own objection. The group claims the sale should not be approved because the terms are "not fair and reasonable and were not designed to (and, in fact, will not) maximize the value of the [THQ's] estates." The creditors claim THQ management set up the auction not to maximize the value of its assets in an effort to make good its debts, but rather to keep jobs in place and ensure THQ, as a whole, will live on.

"Taken as a whole, the Bidding Procedures are designed specifically to ensure that Clearlake is the successful bidder and that [THQ's] business will continue as a 'going concern,' whether or not such outcome would be in the best interests of the [THQ's] unsecured creditors and/or maximize the value of [THQ's] estates," a line from the document reads.

The claim also takes issue with a requirement that prospective purchasers bid on THQ as a whole, rather than on a title-by-title basis. This would eliminate the possibility of potential buyers bidding on franchises they are most interested in, instead forced into an all-or-nothing option.

Much like DeAngelis, the THQ creditors believe the sale process timeline was much too quick. "Under any circumstances, [THQ's] proposed timeline would be extremely aggressive--under the present circumstances, they are unfair and unreasonable and should not be approved." The creditors also bemoaned the timing of the sale. They said holding such a process during the holiday season--when numerous interested parties are away--compounds the difficulty of maximizing value for creditors.

A hearing concerning the THQ sale bidding procedures will be held today, with prospective bidders required to submit their bids by January 8. The actual auction will take place January 9 and the final sale hearing will be held January 10.

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