Company of Heroes 2

THQ isn’t having an easy bankruptcy. Courts just denied its request for a quick sale. The maker of Saints Row video games also didn’t win approval of a loan to fund its operations.

Federal bankruptcy judge Mary Walrath took the side of creditors who objected to the proposed sale process because it didn’t give potential buyers enough time to make rival bids. THQ filed for bankruptcy protection on Dec. 19 and announced the same day that Clearlake Capital was prepared to buy all of its assets for $60.5 million. The deal gave rival bidders until Jan. 9 to kick the tires and make their own competing bids. But the judge said that was not enough time.

THQ was a victim of disruption in the game business and poor bets on games by management. Its dedicated uDraw art tablet bombed on game consoles as the popularity of Apple’s iPad soared. Yet THQ owns major game properties such as Company of Heroes (pictured above), Darksiders, and Metro.

“I have problems concluding that the pre-petition sale process was fulsome,” Walrath told lawyers at the hearing, according to Bloomberg. She said THQ “did not even put out to the public that it was for sale” until potential buyers signed non-disclosure agreements.

Oddly enough, though, everybody pretty much knew Agoura Hills, Calif.-based THQ was available for sale, since it was struggling for more than a year and it had hired a financial firm to explore its options as far back as June. No bidders emerged during that long road to bankruptcy. But the court didn’t consider that.

Walrath noted that about 10 potential buyers contacted THQ after finding out about the sale from its bankruptcy filing. That was evidence that THQ didn’t try hard enough to find bidders. Creditors who objected wanted the bidding process extended by several weeks.

Warner Bros. Entertainment, which bought Midway Games Inc. out of bankruptcy in July 2009, told the court it would be interested in evaluating THQ’s assets if the sale process is extended. Creditors also said that bidders should be able to make offers for specific game titles rather than offering to buy the company as a whole.

THQ also wanted approval of a $37.5 million bankruptcy loan, which could be paid off on Jan. 15, after the quick sale was finished. It said it would not be able to pay off the loan without a sale.

“I am not convinced that we are under the gun to have a sale process by the 15th,” Walrath said.She scheduled a hearing for Jan. 7.

THQ listed assets of $204.8 million and debt of $248.1 million.

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