No local creditors among largest claims against THQ

CHAMPAIGN — The Chapter 11 bankruptcy filings by video game studio Volition Inc. and its parent company, THQ Inc., show dozens of local creditors — but none among THQ's 40 largest unsecured claims.

Volition, which employs about 200 at its headquarters in Champaign, made the filing Dec. 19 in concert with THQ's filing, as did three other THQ subsidiaries. The cases have since been consolidated.

Chapter 11 bankruptcy allows companies to reorganize their debts, unlike Chapter 7 bankruptcy, in which companies liquidate their assets.

THQ is seeking a sale of its business, ostensibly to affiliates of Clearlake Capital Group. In the meantime, THQ has said it plans to continue operating its studios as usual, with no reductions in workforce.

THQ said the filing would let it shed certain obligations and emerge with backing from a new owner with experience in software and technology.

Volition's filing said the studio has between 200 and 999 creditors. The studio's assets are estimated between $500,000 and $1 million, while its liabilities are estimated between $1 million and $10 million.

Volition's filings did not detail the largest claims against the studio but did show the 40 largest unsecured claims against THQ.

The largest unsecured claim was a $101.9 million claim from Wilmington Trust. Other major unsecured claims against THQ include:

— World Wrestling Entertainment, $45 million.

— Yuke's Co. Ltd., Osaka, Japan, $17.8 million.

— Mattel Inc., $12.75 million.

— Viacom International, $10 million.

— JAKKS Pacific, $4 million.

— Microsoft Licensing, $2.9 million.

— Starcom Mediavest Group, $2.62 million.

A 117-page "creditor matrix" filed in the THQ case included dozens of creditors in Champaign-Urbana — many of them employees, but also businesses and state agencies. The amounts owed to those creditors were not listed, however.

THQ's largest equity holders, according to the filing, are Atlanta-based Invesco Advisers, which owns 10.17 percent of THQ's common stock, and New York-based Brencourt Advisors, which owns 9.84 percent.

Comments

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parkmymeterelsewhere wrote on December 27, 2012 at 12:12 pm

No loss to the community if it were to close permanently.

Ryder wrote on December 27, 2012 at 6:12 pm

I strongly disagree. Whatever you may think of the business or how it was run, THQ was (and still is, while the proceedings go on) a significant employer of middle class to upper middle class workers in the area. Property values in many of the Champaign and Savoy subdivisions were buoyed for many years by these families buying and living in these homes.

Many downtown businesses also enjoy support from the Volition employees during the weekday lunch hour. Losing a sizeable tech employer and its employees, and more specifically the tax revenue and spending they brought in, would actually be a significant "loss to the community."

cretis16 wrote on December 28, 2012 at 9:12 am

Not really..they had grabbed a nice chunk of state aid and federal aid. Maybe we should consider a stimulas plan like GM...then the giverment could sell the stock at 1/2 price.

parkmymeterelsewhere wrote on December 28, 2012 at 3:12 pm

Some of those employees live downtown and not in suburbia.  They would not have a job

if:

The building owner's wife hadn't got on the city council and demanded ALL the tax increment monies supplied by taxpayers.

Many of the emloyees were hired from out of state and not locally.

Our children were not brainwashed into having their parents buy these ridiculous products that serve absolutely no aesthetic conrtbution to society except violence and a love for guns and a general lack of creativity.

So now that the taxpayer has been conned out of money they get to wipe out their debt so we can pay for their jobs TWICE?

cretis16 wrote on December 28, 2012 at 4:12 pm

Excellent points....interesting things happen when property owners somehow get ahold of the taxpayers purse. People wonder why their property taxes are so high....these people bleed the taxpayers and then leave town or file Chap 7 or 11. Disgraceful.....

adc123 wrote on December 31, 2012 at 3:12 am

Unless you have some sort of evidence to back up your claim about how "these people bleed the taxpayers", your comment is nothing short of jargon. 

As far as I can tell, THQ has no obligations to the city of Champaign or the taxpayers so I don't see how even if they did file for bankruptcy that would hurt the taxpayers. Although if you have some information that is nowhere to be found on the internet, please share.

bmwest wrote on December 30, 2012 at 1:12 pm
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Does Volition/THQ own the building?  I assumed they were just leasing space.

Someone else mentioned them receiving state and federal subsidies.  I don't remember reading about that in the N-G.  Does anyone have a link to further reading on that topic?

I'm not sure I follow about where the employees came from.  I'm guessing that many of the employees have very specific, high-quality skills that this area would have difficulty producing without outside hiring.

I can't speak to the social merits or lack thereof of their products, although I did find Red Faction mildly entertaining when I played it several years ago.  Generally speaking, though, there's a lot of crossover between gaming, science, and movies in terms of technological capabilities so gaming, with violent games often leading the pack, has likely contributed at least some to society in terms of entertainment and visualization capabilities in medical science.  I've heard that studies show violent games don't incite violent behavior.  I personally have never felt a strong urge to act out a violent game although I could see certain people in certain situations being more vulnerable or learning ways to be more destructive than they otherwise would have been.

It sounds like they're restructuring their debt, not cancelling it.  I don't have much experience with bankruptcy but I was under the impression that restructuring is like refinancing a loan to a longer term or lower rate to cut costs.  I think that is at the expense of their creditors and not taxpayers in general.

parkmymeterelsewhere wrote on December 31, 2012 at 12:12 pm

I think at the outset the core group of employees came from california;  but there well could have been U of I students capable of employment in this area instead of out-of-state.

Re-structuring debt is not the sme as full bankruptcy;  but recent figures and the "fiscal cliff" worldwide remind the taxpayer of the flow of money worldwide right on down to entities like Volition:

Greece debt calculates to 36,000 for each citizen if they could pay it off.

U.S. debt calculates to 51,000 per person.

Volition debt as reported by the news media:  2-10 million or 6 million projected average; 1 million liquid assets; 200 employees divided into the 6 million debt equals 30,000 each so the employees are basically below the national average---if their personal debt for car/house/etc. doesn't bring them up to 51k.   Spreading this debt out over a period of time and making it work would require a revolutionary boom sales period in order to cover that debt burden.  Chances are they will be flying like the airlines do every 6 months with bankruptcy proceedings.  The difference between Volition and airlines is that we necessarily need airlines but not video games; there are many more necessary forms of leisure; it hasn't qualified itself as artistic "significant form".

bmwest wrote on January 01, 2013 at 10:01 am
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I'm not sure dividing by the number of employees is the appropriate way to calculate their debt per person.  The other calculations use the number of citizens in the country since they will ultimately bear the cost of repayment.  The employees generally won't have to repay the company's debts.  That will be its customers through sales or its creditors through bankruptcy.  $6M in debt actually doesn't seem that bad.  If they sell 3M copies of one game, they'd only need to make $2/game in profit to pay that off.

parkmymeterelsewhere wrote on January 01, 2013 at 11:01 am

the $2/3 mil. units sold sounds/reads like an inside source to the game;  if the 3 mil were a reality-- as it stands now there would be no need  for a chapter filing.

bmwest wrote on January 01, 2013 at 10:01 pm
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I just pulled the 3M units sold number from their Wikipedia page for the number of units sold for their last game release.  $2 was just a number I came up with by dividing the debt by the units sold.  Recall that this is just for Volition.  The parent company, THQ, which filed the reorganization form of bankruptcy is a much larger company with presumably a much larger debt load and probably not as successful games sales as the local Volition subsidiary.

ajbuckle wrote on January 02, 2013 at 10:01 pm

Before you all blow a gasket, lets review a couple of facts.

 

1.  THQ declared bankruptsy, not Volition.  Nobody local to Champaign is to blame for this.

2.  This is Chapter 11, not Chapter 7.  Chapter 11 bankruptsy is the one where creditors get screwed, but the operation stays open.  Chapter 7 is the one where they close the doors and everybody loses their jobs.  There are not going to be mass layoffs at Volition, and the big losses are for companies out of the area.  This is not likely to have a big immediate impact on our local economy.

3.  The main creditors are licensees, not people who loaned actual money to THQ, and not the taxpayer.  This means that the games based on WWF and Mattell products (wrestling games, and Barbie games and such) didn't sell well enough to pay the license fees.  Nobody is getting paid from government money (like they did with Solyndra), the taxpayer is not being "conned out of money".

4.  THQ declared bankruptsy, not Volition.  This is bigger than whether or not the next Volition game sells 3M copies.

parkmymeterelsewhere wrote on January 05, 2013 at 8:01 pm

The gasket blew when the busiess opened and will remain an unstoppable leak for all those involved; bad business.