South Park Studios objects to THQ's sale of The Stick of Truth, seeks $2.275 million in default payments

South Park Digital Studios LLC, the company that owns the South Park license, filed an objection in Delaware bankruptcy court recently to prohibit the sale of South Park: The Stick of Truth unless several conditions are met during THQ's upcoming bankruptcy proceedings, according to documents filed in the Delaware court.

The objection asks the court to deny the sale of South Park: The Stick of Truth unless South Park Digital Studios consents to the sale transfer of any South Park licenses, receives a payment of $2.275 million for defaulted payments and "adequate assurance of future performance" for the game.

According to objection filed by South Park Digital Studios (PDF link) dated Jan. 18, the Studio and THQ entered into an agreement referred to as a "Deal Memo" on June 29, 2011 to license the South Park intellectual properties for use South Park: The Stick of Truth, which would be developed for THQ by Obsidian Entertainment.

South Park Digital Studios objects to the proposed sale, stating in the document that "applicable law excuses Licensor from accepting performance from or rendering performance to a party other than THQ." Furthermore, even if the acquisition were possible, THQ has "not provided adequate assurance of future performance of the Deal Memo in the hands of a prospective purchaser." The sale would require South Park Digital Studios' consent because the elements being sold are owned and licensed by the studio.

"Applicable law excuses Licensor from accepting performance from or rendering performance to a party other than THQ."

According to the objection, the Deal Memo affords South Park Digital Studios "the option to acquire from THQ all elements of the South Park game and related products in the event of THQ's breach, provided that Licensor pays to THQ the actual costs incurred and paid by THQ."

In THQ's Jan. 21 reply (PDF link), the company argues that the license was exclusive, which makes it eligible for sale under the Copyright Act of 1976. THQ's response cites redacted sections of the Deal Memo to demonstrate the "plain language of the contract."

THQ's document also states that it is "currently evaluating" South Park Studios' claims of monetary defaults and that the company intends to "provide an appropriate evidentiary record at the Sale Hearing for the Court to determine that the adequate assurance requirements ... have been satisfied."

THQ's financial troubles came to a head earlier this year when the studio announced that its games would be sold "title by title" in an auction scheduled for today, Jan. 22. Five companies, including Electronic Arts and Warner Bros., are said to be potential buyers.

For more on the unfolding THQ narrative, be sure to check out our Storystream below.