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Starbreeze faces insolvency, CEO steps down

Swedish firm has applied for "reconstruction" with Stockholm courts as financial impact of Overkill's The Walking Dead becomes clear

The CEO of Starbreeze has stepped down and resigned from the board of directors, as the Swedish company prepares to take drastic action to regain financial stability.

Bo Andersson Klint has been CEO of Starbreeze since 2013, leading it toward the service-based model typified by Payday 2. However, while the company has enjoyed success with that strategy, the last two years brought huge investment with not enough return.

The poor commercial performance of Overkill's The Walking Dead was followed by a big price cut and a notice that Starbreeze would need to cut costs. However, the company is now preparing for a very difficult period, with the departure of Klint just one measure being taken to ensure its survival.

"In this phase, Starbreeze needs a different kind of leadership and we have therefore decided to ask Mikael Nermark to take on the full responsibility with our full mandate for this new phase," said Starbreeze chairman Michael Hjorth in a statement.

Nermark will be acting CEO until a full replacement is found. He has been deputy CEO since 2009, and took the role between 2011 and 2013.

"Nermark will take over management of operations and lead the work to focus the company," Hjorth continued. "During his tenure as CEO in previous years, he implemented a comprehensive restructuring and repositioned the company from work for hire to game development based on proprietary IP."

Klint's departure coincides with Starbreeze filing with the Stockholm District Court for "reconstruction" - a rescue procedure for Swedish companies facing insolvency.

"The decision is based on a shortage of liquidity and deemed to be a necessary step to give the Company the time needed to negotiate a long-term financial solution and implement changes in the organization and operations," Starbreeze said, adding that its financial targets for Q4 2018 and 2020 are no longer relevant.

Starbreeze had already announced a plan to lower costs, but "the latest statistics" relating to Overkill's The Walking Dead suggest even lower revenue than initially expected. This will result in a "shortfall of cash" in January next year.

The "reconstruction framework" will cover employee salaries and day-to-day operations, but "no payments can be made to suppliers for services or goods relating to the period prior to the date of filing for reconstruction. Suppliers will be paid for services and goods provided during the reconstruction period."

Divisions of Starbreeze that are only partly funded by the company could be "indirectly affected" by the reconstruction process. These include Nozon, Parallaxter, Starbreeze LA Inc, Starbreeze USA Inc, Starbreeze Paris, Starbreeze Barcelona, Starbreeze IP LUX, Starbreeze IP Lux II Sarl and Dhruva Infotech Ltd.

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