Objection claims bankruptcy was 'orchestrated' to benefit executives and friends
THQ's lendors have filed an objection seeking to block the current bankruptcy proceedings for the troubled publisher.
The company filed for chapter 11 bankruptcy on 19 December, with Clearlake Capital appearing as a "stalking horse" bidder for $60.5 million.
Under the terms of the current filing, Clearlake would aquire THQ wholesale if no other bidders appeared within 30 days.
Lendors filed the motion in objection to the terms of the proceedings and making the staggering claim that THQ's November financial crisis was fabricated in order to benefit recently hired executives and their friends.
According to Distressed Debt Investing Roberta DeAngelis, the U.S. Trustee overseeing the THQ bankruptcy, filed an objection claiming the period is too short to allow for rival bidders.
In addition, DeAngelis argues that the current bidding procedures only allow a small number to attend, while the local court rule requires that "the auction be conducted openly and all creditors will be permitted to attend."
A separate filing by the "Ad Hoc Committee of Convertible Noteholders", consisting of Silverback Asset Management, Third Avenue Focused Credit Fund, and Wolverine, also seeks to halt the bankruptcy process.
The committee claims that by marketing the company as a whole, THQ, Clearlake, and Centerview Partners "effectively precluded strategic investors from participating in a sale process."
The lendors claim that recently THQ president Jason Rubin and Jason Kay "orchestrated to take over the Debtors and capture, for themselves, the significant “upside” value in the Debtors’ business."
The filing alleges that Rubin had prior experience with Centerview Partners, and hired the M&A firm in less than two weeks after having been handed the THQ presidency.
The retention of Centerview was not announced until November.
"...It appears that THQ’s management and Centerview set the wheels in motion tomanufacture a liquidity “crisis” which culminated in the Debtors’ chapter 11 filing and the expedited Bidding Procedures Motion," claim the lendors.
Some of the controversy revolves around the value of THQ's IP, and its decision to continue development on its current game lineup.
The publisher is currently working on Company of Heroes 2, South Park: The Stick of Truth, and a new Saint's Row game.