Unsecured creditors of Midway Games have asked a federal bankruptcy court to take a look at whether Sumner Redstone and his National Amusements Inc. (NAI) acted improperly in selling a controlling stake in Midway to Mark Thomas at a huge loss, a transaction which forced Midway to file Chapter 11. NAI denies any wrongdoing.
According to Chicago Tribune reporter Wailin Wong, who has been covering the case, the complaint filed this week by the official committee of unsecured creditors describes Thomas as “an individual of relatively limited means and sophistication” and “a wholly unsuitable acquirer” of the majority stake in Midway.
It was the sale of that stake for less than $100,000 that triggered “change of control” provisions. Bondholders demanded immediate payment and Midway was forced to file for Chapter 11 bankruptcy protection.
The creditors charge that the sale to Thomas was “irresponsible behavior” by Redstone and NAI which denied Midway and its other creditors an opportunity to secure a true strategic partner to restructure the electronic games company’s business.
The bankruptcy judge had already given the creditors committee permission to sue Redstone, Thomas and others. NAI has called the lawsuit “completely without merit.”