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THQ lenders object to quick sale of company, want game franchises sold piecemeal

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A group of lenders have filed an objection in a Delaware court over the quick sale of THQ's assets to Clearlake Capital Group following the struggling video game publisher filing for bankruptcy protection last month. But THQ says it's likely to run out of cash this month, necessitating the short sale window of just 30 days.

The lenders say the quick turnaround on the sale of THQ's studios and game franchises doesn't afford other potential buyers the opportunity to make competitive bids and that the publisher's stable of franchises — Saints Row, Darksiders, Homefront, Company of Heroes, et al. — should be considered for sale on a title-by-title basis, not as a whole.

The lenders, which hold $41 million in convertible notes, say in a court filing that the bidding on THQ's assets "appear to have been designed specifically to thwart any potential bidders from stepping forward to compete with Clearlake's bid." The "unjustifiably accelerated sale timeline," originally planned to close in about 30 days, will prevent prospective bidders from having an opportunity to perform diligence on THQ's assets before submitting a bid, they say.

The objection lists three notes holders: Silverback Asset Management, Third Avenue Focused Credit Fund and Wolverine Flagship Fund Trading Limited.

In addition to objecting to the speed and comprehensive nature of the sale, the lenders allege that THQ president Jason Rubin and Chief Strategy Officer Jason Kay orchestrated a sale with the help of Centerview Partners to exploit the "significant upside" of THQ. The lenders further allege that THQ management manufactured a liquidity crisis, leading to the chapter 11 bankruptcy protection filing.

According to Distressed Debt Investing, Roberta DeAngelis, a U.S. trustee overseeing the bankruptcy case, also filed an objection, citing the short sale window and arguing that bidding procedures limit the number of potential buyers.

During a hearing, THQ counsel Jeffrey C. Krause said the quick turnaround on the sale was necessary, based on the terms of certain financing agreements, reports Law360. Krause reportedly said THQ would run out of cash by Jan. 15.

THQ announced it had filed for bankruptcy protection and planned to sell its studios and assets to stalking horse bidder Clearlake Capital Group in December. Following the announcement, THQ president Jason Rubin wrote that the process represented "a new start" for the publisher. The Agoura Hills, CA based publisher was recently delisted from NASDAQ.