It's been a bad year for video game companies. Back in June, Curt Schilling's 38 Studios filed for Chapter 7 bankruptcy after racking up more than $150 million in debt.
Now videogame maker THQ is going under. The company has filed for Chapter 11 bankruptcy protection and is planning to sell its assets to affiliates of the private equity firm Clearlake Capital Group for about $60 million, The Wall Street Journal reports.
THQ was founded in 1989 and is best known for its "Saints Row" and WWE franchises. Kids' games based on licenses from Pixar and DreamWorks used to be some of the company's biggest sellers. However, the market has dried up in recent years.
In an attempt to revive its children's gaming line, THQ released the "uDraw," a gaming tablet. The move turned out to be a disaster. The failed product pushed THQ's shares so low that it had to use a reverse stock split in order to remain listed on Nasdaq. The company's stock has dropped 84 percent since the start of the year, according to the Journal.
THQ now hopes that Chapter 11 bankruptcy will lead to a much-needed cash infusion. In order to repay creditors and emerge from bankruptcy, debtor companies often lay off workers, close branches, and sell their assets.
Clearlake is currently the lead bidder in the asset auction. The firm plans to acquire THQ's four studios and any games that are currently in development.
THQ says that the asset sale will allow the company to "shed certain legacy obligations and emerge with the strong financial backing of a new owner with substantial experience in software and technology." It hopes to complete the sale within the next month or so.
There's some good news for the company's workforce. THQ doesn't intend to lay off any of its staff, and it expects to keep its current labor contracts. However, that will ultimately be up to the bankruptcy court.