Midway Games has filed for Chapter 11 bankruptcy.
A recent "change in ownership triggered accelerated repurchase obligations relating to two classes of Midway debt, which Midway anticipated it would be unable to satisfy," the company said Thursday in a statement. In December, Midway announced that investor Sumner Redstone sold an 87 percent stake in the company to Mark Thomas in exchange for $100,000 and the assumption of $70 million in debt.
"This was a difficult but necessary decision," Midway CEO Matt Booty said in a statement of the bankruptcy filing. "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."
In its release, Midway kept its chin up, touting its "strong fundamentals" and pointing to strong fourth-quarter sales. Midway said a few titles, such as Mortal Kombat vs. DC Universe and TNA iMPACT!, have shipped more than a million units each. Midway says it believes it will be able to operate in a business-as-usual fashion.
In order to cut costs, the game maker laid off 25 percent of its staff, closed its studio in Austin, Texas, and suspended several "noncore" projects in December.