Midway Games Inc., creator of the Mortal Kombat franchise, sought bankruptcy protection from creditors on Feb. 12 but said it expects to conduct business as normal during the reorganization.
The road to bankruptcy began in early December, when media magnate Sumner Redstone sold his 87 percent stake in Midway to Mark Thomas for $100,000 and $70 million in debt.
The change in ownership triggered provisions in convertible bonds that allowed creditors to request full repayment. The company warned that it did not have enough liquidity to cover those obligations if all of its bondholders asked for accelerated repayment.
Midway's bondholders agreed to waivers on the repayment. But one of those extensions was set to expire Feb. 12 and the other Feb. 19.
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Mortal Kombat vs. DC Universe, the latest iteration of the franchise, has shipped nearly 2 million units since its release in November, chief executive and chairman Matthew Booty said.
However, Midway is entering Chapter 11 with an uncertain outlook on game development and revenue generation. The company said in December that it would cut 25 percent of its staff, suspend certain projects and close a studio in Texas.
Video game sales jump 13%
Nintendo drove the U.S. video game market in January, with industry sales of gaming systems, software and accessories growing 13 percent, to $1.33 billion.
According to market researcher NPD Group, Americans bought $445.4 million worth of video game hardware during the month, a 17 percent increase from the same period a year earlier.
The Nintendo Wii was by far the month's best-selling system, with 679,200 units sold, followed by the handheld DS, also by Nintendo, with 510,800.
The Xbox 360 from Microsoft Corp. sold 309,000 units. The priciest of the three consoles, the PlayStation 3 from Sony Corp., sold 203,200 units.
January software sales climbed 10 percent to $676.6 million.
Eidos board encourages sale
Japanese video game maker Square Enix Co. offered last week to buy Britain's Eidos Interactive Ltd., the publisher of the Tomb Raider series, in a deal valued at $121.7 million.
GameSpot reported that the Eidos board of directors has unanimously recommended the deal to shareholders.
Square Enix is best known for the Final Fantasy series.