In documents filed yesterday with the United States Bankruptcy Court of Delaware, THQ asked the court to allow them to sever contracts with WWE and Yukes, the Japanese developer who worked on the WWE videogame franchise.
The contracts would be severed in order to allow WWE and Yukes to make deals with Take Two for future WWE videogame releases.
THQ has been working on transferring the WWE rights for some time, compiling a list of ten potential buyers. According to documents filed, three of those buyers completed due diligence with THQ, WWE and Yukes but none were willing to take over the existing contracts due to the huge amount of debt owed to WWE and Yukes.
Take Two, however, expressed interest in working with WWE and Yukes for future development of games if they were allowed to enter into a new, fresh contract with new terms. THQ facilitated those negotiations between the parties while also negotiating releases from their contractual obligations with WWE and Yukes. Basically, THQ helped set their former partners up with a new company in exchange for having some of the money they would owe the entities wiped away.
THQ claimed to the court they would save millions by reducing claims against them. The company is locked into a contract through 2017 with WWE that requires them to pay a $7.5 million dollar royalty annually for the licensing rights for the videogames.
THQ noted in the documents that should the agreement not be approved and WWE files claims against them for failing to produce the WWE '14 videogame, it could result in up to $45 million in claims against THQ just for that one game alone...and they would still be on the hook annually through 2017 for additional damages.
The agreement would see THQ terminate their relationship with WWE and give up the rights to all future WWE games in exchange for WWE giving up any rights to legally pursue THQ for damages as well as WWE receiving a payment of $650,000 for royalties owed for sales of WWE '13 during the bankruptcy process.
THQ would also terminate their relationship with Yukes to allow them to enter a new relationship with Take Two as well as transfer all THQ ownership of Yukes stock in exchange for Yukes giving up claims of damages ranging from $15-$20 million against THQ. THQ will also pay $250,000 in royalties owed to Yukes for sales of the WWE '13 videogame during the bankruptcy period.
The agreement would also see Take Two take over the employment of THQ's WWE '14 "fight team" working on the WWE gaming franchise, saving THQ from saving to terminate their employment and paying out $140,000 worth of severance packages.
THQ is in the process of having its assets sold off piece by piece by the bankruptcy court after failing to have all of its assets sold off at once to an investment firm that would have pumped new capital into THQ and continued it as an operational company.
The hearing on the WWE matter is set for 2/19 at 9:30 AM in Wilmington, Delaware at the US Bankruptcy Court.
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