THQ has had its efforts to make a quick bankruptcy sale to investment company Clearlake Capital thwarted at a hearing yesterday in Wilmington, Delaware. Bankruptcy Judge Mary F. Walrath ruled that the publisher had not given other potential buyers enough time to make rival bids.
In statements to lawyers at the hearing, Judge Walrath said “I have problems concluding that the pre-petition sale process was fulsome” and noted that THQ “did not even put out to the public that it was for sale” until non-disclosure agreements were signed by potential buyers.
THQ was looking for court approval to hold a 9 January auction, in which the majority of its assets would be sold to Clearlake Capital for $60 million USD. Rival bidders had until 8 January to submit offers, but creditors of THQ wanted the sale process extended by some three weeks.
Judge Walrath has scheduled a further hearing for Monday 7 January, adding that in the meantime parties involved in the process “need to talk”.
Approval of a $37.5 million USD bankruptcy loan was also denied to THQ at Friday’s court hearing. However, according to lawyers at the hearing, THQ exceeded its cash flow for the first weeks of bankruptcy, giving the publisher more time before its own funds run dry.
Further reports from the court appearance suggest that “5 strategic buyers” are involved in ‘due diligence’ (evaluating THQ’s intellectual properties and assets for a potential bid) with the publisher. One of those is likely to be Warner Bros, who had representatives at the latest bankruptcy hearing.