Creditors have been complaining there was something fishy in the circumstances surrounding the death of Midway Games (once MWY, now delisted).
Maybe now they’ll get some answers: Sumner Redstone (and his daughter Shari too) have been subpoenaed in US Bankruptcy Court to explain the nature of their relationship with new Midway Games owner Mark Thomas.
To recap, in December Sumner sold his 87% stake in Midway to Thomas for the piddling sum of $100,000 plus debt. The move set off a series of debt covenants allowing Midway’s creditors to demand immediate repayment on $150 million the company owed. Predictably, the company went bankrupt shortly ahead of the debt’s due date.
But it turns out Mark Thomas — a man with no background in the gaming industry — has “preferred debt” as part of his deal with Sumner. Midway’s other creditors charge that could mean Thomas could conceivably turn his $100K investment into a $30 million payout (money coming out of their pockets) as Midway executives find a buyer for the Mortal Kombat IP, valued at up to $40 million.
Why did Mark Thomas get such a sweetheart deal? What’s his relationship to Sumner and Shari Redstone? Did the deal violate the rights of Midway’s other creditors?
That’s what lawyers want to know. Specifically, Shari is commanded to hand over:
“All COMMUNICATIONS YOU had with anyone CONCERNING the REDSTONE-THOMAS transaction.”
“All COMMUNICATIONS between YOU and YOUR representatives and Mark Thomas and/or his representatives.”
“All COMMUNICATIONS between YOU or YOUR representatives and the THOMAS PARTIES and/or representatives.”
“All DOCUMENTS and/or COMMUNICATIONS REGARDING any due diligence and/or investigation that YOU and/or YOUR representatives performed on Mark Thomas and/or the THOMAS PARTIES.”
Sumner and Shari will be deposed on March 19 at a private law firm in New York. Stay tuned.