Midway Games committee agrees to settle $2.8 million lawsuit claim

By Caroline Salls

Pittsburgh, May 27 - Midway Games Inc.'s official committee of unsecured creditors requested court approval to settle part of a lawsuit filed against several National Amusements, Inc. parties, according to a Wednesday filing with the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, the committee filed a lawsuit against National Amusements, Sumco Inc., Sumner M. Redstone 2003 Trust and Sumner M. Redstone.

In the lawsuit, the committee alleged that $90 million in loans National Amusements made to Midway Games in the year before it filed for bankruptcy should be recharacterized as equity.

The committee also alleged that the at least $2.8 million in payments made under the loans were actually disguised dividends or other returns on capital and therefore constituted avoidable constructive fraudulent transfers.

Midway said the $2.8 million in avoidance claims were the only committee claims that survived a bankruptcy court order dismissing part of the lawsuit.

Under the settlement, National Amusements will pay $1 million to Midway's estates in settlement of all claims.

A hearing is scheduled for June 23.

Midway Games, based in Chicago, is a developer and publisher of interactive entertainment software for videogame systems and personal computers. The company filed for bankruptcy on Feb. 12, 2009. Its Chapter 11 case number is 09-10465.

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