Objections Filed Vs. THQ’s Quick Sale
THQ declared bankruptcy last month and announced plans to sell itself to Clearlake Capital Group for $60 million within 30 days, pending a bidding process and court approvals. Two objections have been recently filed that may prevent the sale from going through.
The first objection came from US Trustee Roberta DeAngelis who took issue with THQ’s proposed auction process in bankruptcy court, which DeAngelis believes was too short to let parties beyond Clearlake fully participate. Further, Clearlake would be due $2.25 million in fees and reimbursements if another company won the bidding under THQ’s plan, a sum that DeAngelis claims is too large relative to the cash offered in the actual bid.
The second objection came from a committee of note holders from the publisher who alleged that THQ management had arranged the terms of the auction to keep their jobs and keep THQ’s doors open rather than to maximize the value of the company’s assets. For instance, THQ refused to entertain offers for anything less than the whole company, ruling out the possibility of strategic buyers bidding for just certain franchises or assets. Furthermore, the note holders are accusing THQ management of manufacturing its current cash shortage in order to increase time pressures and force a quick sale to Clearlake. The committee stated:
“Taken as a whole, the bidding procedures are designed specifically to ensure that Clearlake is the successful bidder and that the Debtors’ business will continue as a ‘going concern,’ whether or not such outcome would be in the best interests of the Debtors’ unsecured creditors and/or maximize the value of the Debtors’ estates.”
THQ cannot catch a break.
via GI International