It's finally the end of the rainbow for THQ as their bankruptcy proceedings end, after outlining and executing on their liquidation bankruptcy plans. U.S. Bankruptcy Judge Mary F. Walrath has decided that the shuttered game publisher "has met the burden of establishing that the plan should be approved, and I will confirm it".
As former CEO Brian Farrell explained, they initially filed for Chapter 11 protection with the intent to keep operating as a business. Unfortunately for them, the plan to place the entire company under a bid by Clearlake failed after unsecured creditors argued to Judge Walwrath that the bidding process went by too fast and they would be able to generate more value for the company if its assets were sold piecemeal.
THQ is still in dispute with their European subsidiaries in relation to those subsidiaries paying back their unsecured creditors. Under THQ's liquidation plans, these creditors are owed between $ 143 to 184 million and should be able to get back 20 to 52 % of the said amount back. THQ argues that these subsidiaries have enough money to pay the creditors back. However, the subsidaries in turn argue THQ is trying to get around bankruptcy rules by trying to get paid before creditors do.
Court proceedings will continue to determine how much unsecured creditors will be able to recover of their investments from the earnings of the company's property auction. THQ will ask that their subsidiaries claims be subordinated to simplify payment procedures, which would otherwise take two years. Judge Walrath will meet again with THQ to settle this dispute August 19.
Source: Bloomberg
