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Saddled With Debt, Midway Games Files For Chapter 11 Reorg

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imageTrying to get out from under roughly $150 million worth of debt, Midway Games filed for Chapter 11 bankruptcy this morning. The filing only covers the Chicago-based publisher’s U.S. operations — not its holdings in Europe. New CEO Matt Booty said the move would “relieve the immediate pressure from our creditors” and give the Mortal Kombat publisher more time to get its books in order and explore other options.

The filing was triggered in part by Sumner Redstone’s sell off of National Amusement’s majority stake in the company in December; the fire sale triggered provisions that allowed Midway’s debtors to ask for full repayment, and would have also forced the company to buy all its shares back from the new owner. With only about $10 million on the books, Midway was ultimately going to default. The company petitioned for a few weeks to delay repayment, but Chapter 11 gives it some much-needed breathing room. Release.

Staci adds: Midway is based in Chicago but incorporated in Delaware, which is where the case is filed. From the initial list of top unsecured creditors, the top content creditor appears to be the National Basketball Association — owed $17.3 million for licensing/royalties — with Warner Bros. Interactive Entertainment at $6.6 million and Epic Games nearly $2 million. National Amusements is owed more than $20 million. Full filing embedded after the jump.

Midway Filing