Midway Creditors Sue for Unjust Enrichment

The Midway saga, which has seen the publisher sold once and now again in search for an investor, is far from being over. The creditors of the company, which is now in bankruptcy protection, have filled a law suit against some of the people who have been involved in the downfall of Midway, including Sumner Redstone, who held the majority of shares at the company, his daughter Shari, who was chairman of the company, investor Mark Thomas, who took it over, and other members of the board.

Gamasutra has obtained the full text of the suit and the allegations are of: fraudulent transfer between Redstone and Thomas for the respective sale and acquisition of the company; unlawful conversion against Redstone for taking part in the transaction; corporate waste against Redstone for participating in the transaction; breach of fiduciary duty against the Midway board for allegedly approving the transaction; breach of fiduciary duty against Redstone for approving and engaging in the sale; and unjust enrichment.

The main idea is that the persons named in the suit are guilty of bringing down a company that was already in bad financial shape while profiting from its troubles all the way until now. The board is accused of having “looked the other way,” while transactions that benefited the Redstone family or Mark Thomas were being made. Apparently, “the interests of the Redstone Defendants” were put above those of Midway.

Midway has not been in good financial shape since 1999, the last year when it managed to post a profit. Since then, debt has been mounting, as the publisher failed to get out titles that generated a lot of sales and as it has failed to cut costs effectively. One of the last games released by Midway before the declaration of bankruptcy was Mortal Kombat vs. DC Universe, which can be characterized as a medium hit. Unfortunately, it was too little and much too late.