While the term “bankruptcy” may invoke negative feelings, it is often a chance to relieve stressful financial times and reduce the pressures associated with being in debt. In the business world, Chapter 11 actually allows for a company to continue to operate while restructuring current debts. In many cases, a company filing for Chapter 11 can move into the future more viable and competitive. Game maker THQ has recently started the process of Chapter 11 bankruptcy. Similarly sized companies all over Long Island may face the same economic challenges that this business does.
The bankruptcy has led to Clearlake Capital Group putting in a $60 million bid to take over the operations of THQ. The bid from Clearlake is considered a “stalking horse,” which allows other companies to come forward and place higher bids. While a sale is pending for THQ, the company has secured $37.5 million in funding, conditioned on court approval, from both Clearlake and Wells Fargo to continue developing games.
THQ has faced difficulties staying competitive with rival firms. Furthermore, the video game industry has faced difficulties adapting to consumers using mobile devices and computers for their gaming needs.
Even through the bankruptcy filing, THQ’s chairman and CEO remains confident about the future of the company and that the company’s reorganization will allow it to be more competitive while retaining the talents of its current operations. Navigating bankruptcy proceedings can be extremely complex in both the personal and business bankruptcy reorganization contexts. Any individual who is faced with economic challenges should become educated on the legal routes they can take to deal with bankruptcy issues.
Source: Bloomberg Businessweek, “Game maker THQ files for bankruptcy,” Dec. 19, 2012