[Update] THQ Broken Up During Bankruptcy Auction, Company Will Cease To Exist

thq logo rgb [Update] THQ Broken Up During Bankruptcy Auction, Company Will Cease To Exist

After a 22 hour long bankruptcy auction that started yesterday, it has been confirmed that THQ‘s assets have been broken up among several bidders and the company will “cease to exist” as of this coming Friday.

The news was announced by a letter addressed to “All THQ Employees” from CEO Brian Farrell and President Jason Rubin, which confirmed that Sega, Koch Media, Cretek, and Ubisoft have all agreed to purchase the bulk of the company’s assets.

THQ had originally planned to sell the business as a whole to the private equity firm Clearlake Capital, however, a Judge rejected the proposed plan after creditors objected on the grounds that a sale of individual assets could result in a higher overall bid price. Today’s letter confirms that is exactly what happened, as the bid for the entire operating business fell short of the bids for THQ’s separate assets.

In the letter, the THQ executives thanked all the employees for their hard work and noted that they “expect” that the majority of jobs associated with the “entities included in the sale” will continue to exist with their new owners. However, they could not guarantee this to be the case, adding that “there will likely be some positions that will not be needed”. Employees can expect to receive a notice within a week if the new owners intend to offer them jobs.

Employees who are not associated with one of the sold assets – aside from a small number of “headquarters staff” that will be kept on to “assist with the transition” – were told that their position will come to an end. THQ added that they are “requesting the ability to offer certain severance pay” to “minimize disruption” as these former employees “determine the next steps in their careers”.

THQ noted that the following assets were purchased during the auction, with the sale expected to close by the end of the week (stats provided by Kotaku).

  • Koch Media – Saint’s Row studio Volition ($22m, versus Ubisoft’s offer of $5.4m) and the Metro IP ($5.8m, versus Ubisoft’ offer of $5.175m)
  • Take-Two – Evolve IP ($10m, versus Turtle Rock’s offer of $250,000)
  • Crytek – Homefront IP (the company was already developing Homefront 2) for $500,000
  • Sega – Company of Heroes studio Relic ($26.6m, versus Bethesda parent company Zenimax’s offer of $300,000)
  • Ubisoft – South Park publishing rights ($3.265m), and the new studio THQ Montreal ($2.5m)
Both the Darksiders franchise and its developer Vigil received no bids, along with several other of THQ’s IPs — including the Double Fine developed Stacking and Costume Quest IPs. The company noted that they will “make every effort to find appropriate buyers” for these assets, “if possible”.

[Update] Koch Media (parent company of Deep Silver) has confirmed that they have acquired the rights to the Saints Row IP along with the studio Volition.

Ubisoft has also confirmed that they have acquired an unannounced game titled Underdog in their acquisition of THQ Montreal, along with the previously outed 1666.


THQ‘s full letter to their employees announcing the results of the auction is posted below.

To All THQ Employees:

We now have the answers we’ve been seeking through our financial restructuring and Chapter 11 case. While much will be written, here are the facts of the bids and auction that occurred

Yesterday morning, we received a competing bid for the operating business, along with Clearlake’s offer, and numerous offers for separate assets.

During an auction process that lasted over 22 hours, the final conclusion was that the separate-asset bids would net more than a single buyer for the majority of the company.

Shortly, we will, present the results to the U.S. Bankruptcy Court, which must concur with our assessment.

The proposed sales of multiple assets is as follows :

Sega agreed to purchase Relic
Koch Media agreed to purchase Volition and Metro
Crytek agreed to purchase Homefront
Take 2 agreed purchase Evolve and
Ubisoft agreed to purchase Montreal and South Park
We expect these sales to close this week.
Some assets, including our publishing businesses and Vigil, along with some other intellectual properties are not included in the sale agreements. They will remain part of the Chapter 11 case. We will make every effort to find appropriate buyers, if possible.

What this means for employees

We expect that most employees of the entities included in the sale will be offered employment by the new owners. However, we cannot say what these owners may intend, and there will likely be some positions that will not be needed under the new ownership. You should receive notice this week or early next week if the new owners intend to extend employment to you. Please note that the terms of your new employment, including pay and benefits, may be different from the current terms of your employment with THQ.

If you are an employee of an entity that is not included in the sale, we regret that your position will end. A small number of our headquarters staff will continue to be employed by THQ beyond January 25 to assist with the transition. THQ has sufficient resources to pay these employees for work going forward, and we will be contacting these employees immediately to ensure their continued employment during this transition period. We are requesting the ability to offer certain severance pay to minimize disruption for employees of non-included entities as they determine the next steps in their careers.

We know you will have many questions about this news. We’ll be meeting tomorrow when we return to talk through this announcement and to answer any questions you have. You will receive a benefits fact sheet and FAQs with answers to some questions that may be on your mind. Please review these materials closely.

A personal note

The work that you all have done as part of the THQ family is imaginative, creative, artistic and highly valued by our loyal gamers. We are proud of what we have accomplished despite today’s outcome.

It has been our privilege to work alongside the entire THQ team. While the company will cease to exist, we are heartened that the majority of our studios and games will continue under new ownership. We were hoping that the entire company would remain intact, but we expect to hear good news from each of the separate entities that will be operating as part of new organizations.

For those THQ employees who are part of entities that are not included in the sale, we are confident that the talent you have displayed as part of THQ will be recognized as you take the next steps in your career.

Thank you all for your dedication and for sharing your talent with the THQ team. We wish you the best of luck and hope you will keep in touch.

Sincerely,

Brian Farrell
Chief Executive Officer

Jason Rubin
President

Source: MCV
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