THQ Files Plan to Pay Creditors From Proceeds of Sales

THQ Inc., the broken-up bankrupt video-game maker, filed a liquidating bankruptcy plan to repay creditors from the proceeds generated from selling the majority of its assets.

Unsecured creditors are projected to recover from about 20 percent to about 52 percent, depending on the amount of allowed claims, according to the disclosure statement, an outline of the liquidating plan filed yesterday.

THQ, the maker of the “Saints Row” and “Company of Heroes” video games before its bankruptcy, failed in its effort to survive the bankruptcy intact with its initially proposed sale to Clearlake Capital Group LP. Instead, most of its assets were sold to competitors at a January auction bringing in about $72 million after unsecured creditors argued the sale process was too fast and that piecemeal offers could bring in more value.

The Agoura Hills, California-based video-game maker said it was forced to seek bankruptcy protection after sustaining losses for the past five fiscal years. The company listed assets of $204.8 million and debt of $248.1 million when it sought court protection on Dec. 19.

Unsecured creditors, who will get their proportional share of the sale proceeds, are estimated to have from $143 million to $184 million in claims, according to the disclosure statement. If the amount of allowed unsecured claims falls within that range, the projected recoveries for unsecured creditors would be 31.5 percent to 51.9 percent.

Terminated Operations

If the claims of European subsidiaries, about $107 million, are allowed, the recoveries are projected to be 19.9 percent to 29.6 percent. The subsidiaries, which have completely or just about terminated operations, have enough cash to satisfy their own debts so any distribution to them would ultimately be returned to THQ, and their claims therefore shouldn’t be allowed, the company said in court papers.

THQ is in the process of selling its remaining assets that didn’t sell at the January auction, including its “Darksiders” franchise. The company received 17 offers by the April 15 final bid deadline and total proceeds will be $6 million to $7 million, according to court documents.

The case is In re THQ Inc., 12-bk-13398, U.S. Bankruptcy Court, District of Delaware (Wilmington).

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