THQ files for bankruptcy protection, selling studios and games to bidder

Struggling video game publisher THQ announced today that the company has entered into a purchase agreement with a bidder to acquire "substantially all of the assets of THQ's operating business, including THQ's four owned studios and games in development."

THQ has also filed for Chapter 11 bankruptcy protection for its U.S. operations in a Delaware court, the company says, to facilitate the sale of the publisher's owned studios and current games in development. The four studios, according to a bankruptcy court filing, include THQ Wireless, THQ Digital Studios Phoenix, Volition Inc and Vigil Games.

The announcement says THQ has entered into an agreement with a "stalking horse bidder" — a bidder chosen by a bankrupt company to avoid lower bids on its assets — an affiliate of Clearlake Capital Group. THQ says it has acquired approximately $37.5 million in financing commitments from lenders Wells Fargo and Clearlake.

In court documents, THQ listed assets of $204.8 million and debts of $248.1 million. According to court filings, THQ's debtors include World Wrestling Entertainment (owed $45 million), developer Yuke's (owed $17.7 million) and toymaker Mattel (owed $12.75 million).

"The sale and filing are necessary next steps to complete THQ's transformation and position the company for the future, as we remain confident in our existing pipeline of games, the strength of our studios and THQ's deep bench of talent," said Brian Farrell, chairman and CEO of THQ in a statement. "We are grateful to our outstanding team of employees, partners and suppliers who have worked with us through this transition. We are pleased to have attracted a strong financial partner for our business, and we hope to complete the sale swiftly to make the process as seamless as possible."

THQ says it does not plan to reduce its number of employees as a result of the bankruptcy filing or sale of its assets.

THQ says its publishing business will continue "without interruption during the sale period" and that development continues at the company's owned studios. The publisher has a number of announced games in development, including South Park: The Stick of Truth at Obsidian Entertainment, Company of Heroes 2 at Relic Entertainment, Metro Last Light at 4A Games, Homefront 2 at Crytek and a new Saints Row game at Volition Inc. Unannounced THQ titles are in the works at THQ Montreal and Turtle Rock Studios.

In November, THQ said it had 10 games in development for its upcoming fiscal 2014 and later, "almost all of which are based on our own IP."

"We have incredible, creative talent here at THQ," added THQ president Jason Rubin. "We look forward to partnering with experienced investors for a new start as we will continue to use our intellectual property assets to develop high-quality core games, create new franchise titles, and drive demand through both traditional and digital channels."

Clearwater put a purchase price on the assets of approximately $60 million, which includes a $10 million note for the benefit of THQ's creditors.

In November, after posting a $21 million quarterly loss and delaying three major releases, THQ announced it was seeking "financing alternatives" with an outside firm. Days later, the company announced it was in default on a loan agreement from creditor Wells Fargo, but was working with the bank to resolve its defaults.