Midway Creditors Sue Over Sale

Andy Chalk

One Flag, One Fleet, One Cat
Nov 12, 2002
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Midway Creditors Sue Over Sale


Sumner Redstone and his Midway Games [http://www.nationalamusements.com/] over the sale of Midway to investor Mark Thomas for only $100,000.

The lawsuit, which also names Thomas and Redstone's daughter Shari, is the result of "a series of disastrous and ill-advised financial transactions that largely occurred during 2008" which were either approved of or ignored by the company's board of directors "to the detriment of Midway." Redstone declared bankruptcy [http://www.escapistmagazine.com/news/view/87771-Majority-Stake-in-Midway-Sold-for-100-000] in February 2009 because it could not fulfill financial obligations to its creditors that were triggered by the deal.

Midway's creditors claim the company's sale generated over $700 million in tax losses for Redstone, resulting in a "massive tax refund" for him while Midway itself got nothing. Further, the suit complains that Thomas is not "an appropriate owner" for Midway, as he has no background in the games industry and no assets to invest in it.

The Midway deal has attracted an unwelcome level of scrutiny and in March Redstone and his daughter were subpoenaed [http://www.escapistmagazine.com/news/view/89969-Shady-Midway-Sale-Under-Scrutiny] by U.S. Bankruptcy Court over allegations of insider trading. Much of the fishiness centers on Thomas, a virtually unknown figure who was granted preferred debt in the deal that could see him earn as much as $30 million on his investment.

The suit also alleges fraudulent transfer between Redstone and Thomas, unjust enrichment, corporate waste and breach of fiduciary duty against Redstone and the Midway board. The creditors want the court to declare the transfer fraudulent and are seeking compensatory and punitive damages as well as the "recharacterization" of $90 million Redstone invested into the company in February 2008 from debt to equity.

Source: Gamasutra [http://www.gamasutra.com/php-bin/news_index.php?story=23596]


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Cousin_IT

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Feb 6, 2008
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n now begins several long years of protracted legal wrangling before finally Thomas turns out to not infact be a real person at all, but Canary M Burns.
 

Ilosia

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Mar 10, 2009
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Why did thy subpoena his daughter as well? Is she some nefarious child fraudster who single handedly created the credit crunch?
 

CarlosYenrac

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Nov 20, 2007
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Ilosia said:
Why did thy subpoena his daughter as well? Is she some nefarious child fraudster who single handedly created the credit crunch?
'daughter' =/= 'Child'

I feel i should point out here that Shari Redstone was born in 1954.....

*edit* also turns out she's VP of CBS and Viacom
 

cleverlymadeup

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Mar 7, 2008
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CarlosYenrac said:
Ilosia said:
Why did thy subpoena his daughter as well? Is she some nefarious child fraudster who single handedly created the credit crunch?
'daughter' =/= 'Child'

I feel i should point out here that Shari Redstone was born in 1954.....

*edit* also turns out she's VP of CBS and Viacom
yeah would be kinda creepy if she was a small child considering Sumner could have possibly seen the creation of dirt

she's basically taking over from daddy who ran those companies
 

Ilosia

The faceless
Mar 10, 2009
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The point is that do they really have any reason to suspect her other than the fact that they're related and she happens to have been involved in the same company?