A business bankruptcy generally occurs because a company faces overwhelming debt. Companies may file for Chapter 11 to gain some relief from creditors while attempting to reorganize the business so that debts can be discharged. Our New York readers are already familiar with video game maker THQ's Chapter 11 bankruptcy. The company filed for bankruptcy in an attempt to save itself, but an upcoming auction may divest it of its most valued assets, meaning many THQ employees will likely find themselves out of work.
Good things appeared to be heading THQ's way when a private equity group seemed ready to buy out the struggling company's assets. But the presiding judge blocked the deal, ruling that the quick sale was unfair to other potential bidders. The deal would have allowed THQ to continue doing business, but now the company will likely see most of its valuable game franchises sold to the highest bidder at an auction.
Other game companies have shown an interest in THQ titles since it filed for bankruptcy. Among those interested in purchasing company assets are EA and Warner Brothers. These companies appear to be interested only in some assets, which would leave the company torn apart.
Businesses in New York can file for Chapter 11 bankruptcy protection to stop creditor activity while attempting to restructure the business and reach a plan to pay some debts while discharging others. Using Chapter 11, the business can work directly with creditors to develop a payment plan that will allow the company to continue doing business while settling the debts owed. But sometimes judges have different plans in mind for what will happen.
Source: Techno Buffalo, "THQ Individual Properties to Be Auctioned Off January 22," Ron Duwell, Jan. 9, 2013