Midway Files For Chapter 11 Reorganization

[Gambid]

It is not a very big secret that Midway's financial situation is pretty bad. As a next step in its fight for survival Midway has filed for chapter 11 reorganization, which will allow it to continue operating for the moment. From the press release:

MIDWAY'S U.S. OPERATIONS FILE FOR CHAPTER 11 REORGANIZATION

Company notes strong underlying fundamentals, but cites recent change in control as the key trigger in need for planned, orderly reorganization

Midway's European operations are unaffected and continue business as normal

CHICAGO – February 12, 2009 – Midway Games Inc. (NYSE: MWY) today announced that the company and its U.S. subsidiaries filed voluntary petitions in U.S. Bankruptcy Court for the District of Delaware for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The filing does not include the company's non-U.S. operations, which will continue business as normal.

In its filing with the Bankruptcy Court, the company cited that the November 28, 2008, change in ownership triggered accelerated repurchase obligations relating to two classes of Midway debt, which Midway anticipated it would be unable to satisfy.

"This was a difficult but necessary decision," said Midway Chairman, President and CEO Matt Booty. "We have been focused on realigning our operations and improving our execution, and this filing will relieve the immediate pressure from our creditors and provide us time for an orderly exploration of our strategic alternatives. This Chapter 11 filing is the next logical step in an ongoing process to address our capital structure."

"Midway enters this process with strong underlying fundamentals, as evidenced by solid fourth quarter sales that exceeded expectations in spite of a challenging retail and general economic environment," Booty added. "Overall, Mortal Kombat vs. DC Universe sales are approaching two million units shipped, TNA iMPACT! has shipped approximately one million units, and our Game Party franchise has sold close to three million units in total."

Midway expects that Chapter 11 protection will enable the company to conduct its business operations as usual. To that end, Midway is seeking approval from the court for a variety of First Day Motions enabling the company to continue managing its operations in the ordinary course. These motions are typical of the restructuring process, and approval is regularly granted.

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[Sub-Zero]

NOOOOOOOOOOOOOO!!!!!!!!!!!!!!

This really really sucks. I can't even begin to describe how much this sucks...it, it just sucks.

[Gambid]

Well... it could be a lot worse.
They are still operating.