Midway Creditors Sue Former Owner, Mystery Buyer

May 13, 2009 -

Gamasutra reports that bankrupt Midway's unsecured creditors have banded together to bring suit against former owner Sumner Redstone (left), new owner Mark Thomas and several current and former board members. Among other allegations, the suit charges the defendants with fraudulent transfer, corporate waste, breach of fiduciary duty and unjust enrichment.

GamePolitics readers will recall that Redstone unloaded Midway to Thomas last November for the bargain basement price of $100,000.

The suit alleges that Midway's board of directors, most of whom had non-Midway business ties to Sumner Redstone, put the media mogul's interests ahead of those of the troubled game publisher in approving the deal. The 2008 fire sale to Thomas, the suit alleges, allowed Redstone to write off $700 million in losses, generating "a massive tax refund" and denying Midway the same tax opportunity. Redstone concocted the scheme to sacrifice Midway, the suit claims, in order to salvage the rest of his troubled financial empire, which includes CBS and Viacom.

The suit is unsparing in its criticism of new owner Thomas:

Thomas [was] completely unsuited to be the 87% owner of a publicly traded company... Thomas knew he was not an appropriate owner of Midway. He had no background in the video game industry. He had no assets to invest in Midway. Upon acquiring his controlling interest, he refused to speak with any officer or director of the company and even refused to disclose his middle initial so that an investigation could be made into his background.

More juicy tidbits:

The Redstone-Thomas transaction was completed in less than two weeks and the Redstone defendants kept the transaction secret from Midway's Board of Directors and management...

 

The... transaction gave Thomas a controlling stake in Midway worth tens of millions of dollars and the right to receive interest and principal payments on a $30 million secured loan and $60 million in unsecured loans... for a mere $100,000...

 

One business day before closing [the deal] after analyzing the litigation risks... [and] being told that  [Redstone] would not give him an indemnity in connection with the transaction... Thomas transferred title and ownership in his house to his wife for $1...

DOCUMENT DUMP: Grab a copy of the lawsuit here.


Comments

Westwood College

In the hotseat against fraud is Westwood College. As it is in for it now, as they just had to pay Uncle Sam about $7 million, for violating the Fair Claims Act.  Westwood College got the business end of the boot as they had reportedly lied to students about graduation rates, acknowledgement of credits with other universities, and a host of other things.  I doubt it's going to mean that students who enrolled there will be getting their personal loans for tuition back.  Westwood is a chain of branch colleges, owned by Alta Colleges, Inc.  The CEO insists, of course, that they did nothing wrong.  It seems clear that Westwood College has some serious credit repair to do.

Re: Midway Creditors Sue Former Owner, Mystery Buyer

Shady dealings killing our franchises. I hope someone bought that mortal kombat. Area 51? bye. Anything else Midway made...bye.

Re: Midway Creditors Sue Former Owner, Mystery Buyer

C'mon people, it's so simple.

MARK THOMAS IS A CANARY BIRD

| XBOX LIVE GamerTag: Harry Miste | Steam ID: Harry Miste | PSN ID: HarryMiste |

| XBOX LIVE GamerTag: Harry Miste | Steam ID: Harry Miste | PSN ID: HarryMiste |

Re: Midway Creditors Sue Former Owner, Mystery Buyer

Hang on, shady dealings around Midway?? NO!!!

Re: Midway Creditors Sue Former Owner, Mystery Buyer

This was gonna happened sooner or later. Maybe we can finally get to the bottom of this.

http://www.magicinkgaming.com/

Re: Midway Creditors Sue Former Owner, Mystery Buyer

Wait, he dumped it on his wife? Harsh.

Re: Midway Creditors Sue Former Owner, Mystery Buyer

No, he sold his house to his wife for $1... in case anyone ever realized this was all a big scam and came after him, he wouldnt lose his home.  Neat, huh?

 

 

Your Yak is Weak!

Your Yak is Weak!

Re: Midway Creditors Sue Former Owner, Mystery Buyer

The rich keep getting richer, the rest of us keep getting screwed, and the sheep keep bleating that capitalism is the most wonderful system in the world.

Re: Midway Creditors Sue Former Owner, Mystery Buyer

Capitalism, like Democracy, is the worst possible form of economics... except for all the others.

Re: Midway Creditors Sue Former Owner, Mystery Buyer

Go read Hayek's "Road to Serfdom" and then we can have this discussion again.  Maybe.

Re: Midway Creditors Sue Former Owner, Mystery Buyer

Anyone NOT see this coming? Anyone? You at the back there? You looked like you put your hand up. Oh right. Nobody then?

--------------------------------------------------

I LIKE the fence. I get 2 groups to laugh at then.

-------------------------------------------------- I LIKE the fence. I get 2 groups to laugh at then.

Re: Midway Creditors Sue Former Owner, Mystery Buyer

Sorry, had an itch.

 
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