Tag Archives: mark thomas

Creditors are suing several parties involved in the recent bankruptcy and original sale of Midway, including Mark Thomas, and Sumner Redstone along with his daughter Shari and his holding company, National Amusements.

The lawsuit stems from what the creditors called a “breach of fiduciary duty, corporate waste and unjust enrichment” pertaining to the financial crisis within the company. The suit states that the current situation “arises out of a series of disastrous and ill-advised financial transactions that largely occurred during 2008.”

According to a 29-page document filed by the creditors, Midway’s board turned a blind eye to the sale of the company and wasteful spending by having “either approved of the transactions or, upon learning of them, looked the other way — taking no steps to investigate and unwind them.”

Redstone’s sale of Midway to Mark Thomas for $100,000 was described in the document as not only a shady deal, but as nothing more than a “massive tax refund” to Redstone which left Midway “insolvent” since 2007.

Loads of accusations there.

Gamsutra’s got the rest of the details. Go have a look.

Mark Thomas, the owner of Midway, filed a document with the to US Bankruptcy Court last week that reveals the company will run out of cash by June.

GamePolitics got hold of the 44-page document, and this is what was discerned:

• Midway will run out of cash in late June
• Midway has no games set to launch in that window that might provide an influx of cash
• Midway overstated the value of the Mortal Kombat franchise
• Midway has operated at a loss for most of the last decade
• In 2008 CitiGroup failed to find anyone interested in acquiring Midway
• Mark Thomas initially offered $1,000,000 for Midway but lowered his offer to $100,000 after re-assessing the risks; by necessity, the deal was finalized quickly and Thomas says that he did not have time to conduct normal due diligence.

Due to confidentiality, some parts of the filing were redacted, failing to shed light on Midway overvaluing the Mortal Kombat series, the list of companies that bid on Midway or how Sumner Redstone benefited from selling it off to Thomas so cheaply.

Sumner Redstone and his daughter Shari have been subpoenaed by the US Bankruptcy Court of Massachusetts over the sale of Midway shares to Mark Thomas.

Thomas purchased the Redstones’ share in Midway for $100,000, inheriting a $70 million debt with it.

His reasoning for accepting those terms was due to $30 million of the debt being secured, meaning he was to be paid before bondholders — who were owed $150 million by Midway.

The subpoena document states: “The cash collateral order places a clear emphasis on insiders getting paid before and, potentially, at the expense of the estates and their creditors.”

Both Sumner and Shari Restone are due to appear in court this month for deposition and to provide documents pertaining to the sale.

Mark Thomas hasn’t been called.

Court documents posted through the link.

This just gets rosier. According to a filing made by new Midway owner Mark Thomas, Midway’s going to very quick cash from Acquisitions Holding Subsidiary, his shell company, and he wants his investment collateral protected.

“It is beyond dispute that [Midway has] an immediate need to access and use AHS’s Cash Collateral,” said the filing.

“Nor can it be disputed that, based upon the Debtors’ 13 week forecasted Budget, [Midway is] hemorrhaging cash at an alarming rate. Indeed, the [Midway] Budget indicates that between February 9, 2009 and May 4, 2009, [Midway] will burn through approximately $12,392,598 in cash representing an approximately 75% depletion of its cash reserves.”

Happy talking talking happy talk. More on GamePolitics.

According to this Reuters report, quoting the Wall Street Journal, Sumner Redstone has sold his 87 percent share in Midway to investor Mark Thomas for $100,000, or $0.0012 a share.

Thomas will assume $70 million of senior secured and unsecured debt.

The sale amounts to a significant loss on Redstone’s investment but secures a hefty tax benefit as he negotiates other asset sales, the paper said.

Redstone has made the move to ease debt on his firm, National Amusements, which has about $1.6 billion in debt outstanding. Half of that will need to be repaid by year-end.

Blimey. More through the link.