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Midway creditors sue Redstone and board members over $100,000 sale

Wed 13 May 2009 7:04am GMT / 3:04am EDT / 12:04am PDT
Business

Complaint "arises out of a series of disastrous and ill-advised financial transactions"

Creditors of troubled publisher Midway Games are suing Sumner and Shari Redstone, holding company National Amusements and investor Mark Thomas, for the sale of the company last November for USD 100,000.

The complaint, detailed by Gamasutra, says the action "arises out of a series of disastrous and ill-advised financial transactions that largely occurred during 2008," which allegedly benefited Sumner Redstone and Thomas to the detriment of Midway Games.

Shari Redstone and other members of the board are blamed for actions which "either approved of the transactions [by Redstone and Thomas] or, upon learning of them, looked the other way - taking no steps to investigate and unwind them."

Creditors also claim that the sale of the company to Thomas generated over USD 700 million in tax losses for Redstone, "which enabled them to obtain a massive tax refund" to the detriment of Midway.

The transfer of the business from Redstone to Thomas should be deemed fraudulent, said the creditors, who are also requesting compensation and punitive damages, and USD 90 million in debt to be recharacterised as equity.

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