Screen shot from Mortal Kombat vs. DC Universe. Credit: Midway Games.

Midway Games has cut 46% of its 520 employees in the last few days, including about 100 developers in its San Diego office who have been working on a wrestling game under a license with TNA.

Some of the layoffs were detailed in a document filed yesterday with the Securities and Exchange Commission. In addition to the San Diego crew, the layoffs include 60 executive and administrative staff members in the company's Chicago headquarters and 75 developers in a U.K. studio. About 210 Midway developers got to keep their jobs as Warner Bros. employees.

The filing also disclosed the final price Warner paid for most of the bankrupt Chicago game publisher's assets: $49 million, or $16 million more than the originally announced price of $33 million. The difference comes from the final tally of the value of Midway's inventory of games and its accounts receivables on July 9, the day before the deal closed, according to Geoff Mogilner, a Midway spokesman.

In addition, the filing shows that Mark E. Thomas, the mysterious Massachusetts investor who in November paid former majority owner Sumner Redstone a mere $100,000 for an 87% stake in Midway, received $5 million for his trouble. That's a 4900% return, minus a few percentage points for legal and administrative fees. That's a tidy score in any economic climate.

Warner, meanwhile, has not said what it would do with its purchase, which includes a development team in Chicago that makes the Mortal Kombat franchise and a Seattle studio that is working on an adventure game called This is Vegas. Warner emerged as the sole bidder for Midway's assets last month, but it didn't take the whole company. Left out of the deal were two studios, one in England that has been shut down, and the other in San Diego. Unless Midway finds a buyer, the San Diego studio faces a similar fate to its U.K. counterpart's.

-- Alex Pham

Follow my random thoughts on games, gear and technology on Twitter @AlexPham.

A Bankruptcy Court judge on Wednesday approved the sale of most of Midway Games' assets to Warner Bros. for $33 million in cash, removing the last big obstacle for the movie studio to acquire the rights to Mortal Kombat, Spy Hunter, Joust and a small library of classic game franchises. Warner will also gain two development studios in Seattle and Chicago.

The Chicago game publisher filed for bankruptcy protection this year after it was unable to satisfy creditors. Last year, majority owner and media mogul Sumner Redstone sold his 87% to Mark E. Thomas, a mysterious Massachusetts investor with no experience in video games, for a mere $100,000. As a result, the financially troubled Redstone was able to claim a $700-million tax loss in 2008.

It turned out to be a sweet deal for Thomas, who received $5 million from the sale to Warner Bros., according to the Chicago Tribune.

Warner Bros. was the only bidder to emerge last month in the sale of Midway's assets. Warner has not said what it plans to do with Midway. One can only surmise that there will be more games similar to Mortal Kombat vs. DC Universe, which sold more than 2 million units.

-- Alex Pham and Ben Fritz

All over but the shoutin' for Midway sale? Credit: Togoodtobe4gotton via Flckr.

Times up! The deadline for submitting bids to buy Midway Games passed Wednesday afternoon with just one offer -- a $33-million deal from Warner Bros. to purchase most of the bankrupt Chicago company's assets.

After Warner Bros. lobbed its offer in May, Midway had hoped to spark a bidding war that would jack up the price. A Chicago investment group and several game publishers had been kicking the tires at Midway, according to a source familiar with the discussions. But none pulled the trigger on a deal.

"No other bids came in, so there's not going to be an auction," confirmed Midway's spokesman, Geoff Mogilner. 

Before the deal goes through, the Delaware court overseeing Midway's bankruptcy will have to resolve complaints by several creditors about the acquisition process. One of those is producer Larry Kasanoff's Threshold Entertainment, which produced two previous "Mortal Kombat" films and claims it has exclusive big-screen and TV rights to the series. Also objecting to the sales process is Tigon Studios, a production company controlled by Vin Diesel, which claims it is owed $200,000 for the star's work on the recently released game "Wheelman."

The next court hearing to address those and other issues will be July 1. As soon as they are resolved and the bankruptcy court officially approves Warner Bros.' bid, the acquisition will close 10 days later, Mogilner said.

Warner Bros. declined to comment. An acquisition would buttress Warner's growing game portfolio, according to a report today in the Times.

The offer includes most, though not all, of Midway's assets, including the company's Mortal Kombat, Spy Hunter, Joust and Wheelman franchises. It also includes two of Midway's four development studios -- one in Chicago and another in Seattle. It remains unclear what will happen to the company's studio in Newcastle, U.K., which makes the Wheelman games, and its studio in San Diego, which is developing a wrestling game based on a license with TNA Entertainment. Those assets could potentially be sold to another buyer.

-- Ben Fritz and Alex Pham

Midway Games' Mortal Kombat franchise has generated more than $1.5 billion in revenue. Credit: Midway Games.

Warner Bros. has submitted a $33-million bid to buy Midway Games, the creator of the Mortal Kombat, Wheelman and Spy Hunter video game franchises.

Midway spokesman Geoff Mogilner said the company expects other bidders to emerge in the next 30 to 45 days as the company winds its way through an auction process. He did not release the names of other potential buyers.

The Chicago company earlier this year filed for Chapter 11 bankruptcy protection after it was unable to meet its debt obligations. 

Warner Bros., which has been bulking up its video game publishing business, would be acquiring several well-established game franchises, including Mortal Kombat, which has generated $1.5 billion in revenue since it was introduced in 1992 on arcade machines. The latest title in the series, Mortal Kombat vs. DC Universe, sold more than 2 million units.

The bid does not, however, include two of Midway's development studios -- one in Britain responsible for making the Wheelman driving games and another in San Diego that's currently working on a wrestling title called TNA Impact. The bid does include the intellectual property for Wheelman, which features actor Vin Diesel, but not the rights to develop the TNA wrestling game. That leaves open the possibility for other suitors to buy the remaining assets or to submit a more comprehensive bid.

Midway employs 75 people at its London studio and about 100 in San Diego.

The company's erstwhile majority owner, Sumner Redstone, last year sold Midway for $100,000 to a little known Massachusetts investor named Mark Thomas. The sale triggered large payment requirements on its long-term loans, including a $30-million payment to Thomas, that Midway was unable to make, pushing the company into bankruptcy.

Creditors earlier this month sued Redstone, Thomas and five board members, claiming that the sale was "fraudulent" because it was conducted solely to create a $700-million tax write-off for Redstone to the detriment of shareholders. The court-appointed creditors asked that Thomas, currently a debtholder, be classified as a creditor. In a bankruptcy case, creditors must wait to collect until after debtholders are paid from the proceeds of any sale.

-- Alex Pham

Sumner Redstone (center) with daughter Shari Redstone (right) and granddaughter Kimberlee Korff in 2003. Credit: Kevin Winters / Getty Images

Creditors of Midway Games have filed a lawsuit against the Chicago company's board members and former majority owner Sumner Redstone, alleging that his sale of Midway in November was a "fraudulent transfer" that benefited the media mogul while pushing Midway into bankruptcy.

The suit, filed Monday in federal bankruptcy court, claims that Redstone sold his 87% stake to investor Mark E. Thomas for a mere $100,000 in order to register $700 million in tax losses to collect a "massive tax refund."

The plaintiffs include a group of unsecured creditors for the publisher of the Mortal Kombat video game franchise. The suit also names Redstone's daughter, Shari Redstone, as well as Thomas and five board members who approved of the sale, alleging that the board made a number of decisions that "put the interest of the Redstone defendants above Midway's interests." They include Robert J. Steele, Joseph A. Califano, Robert N. Waxman, William C. Bartholomay and Peter C. Brown. Shari Redstone resigned as Midway's board chairwoman in November and was replaced by Brown, who was chief executive of AMC Entertainment.

“This suit is completely without merit," a National Amusements Inc. spokeswoman said in an e-mailed statement. "The conduct of Mr. Redstone and NAI was entirely proper, and we strongly disagree with any suggestion that Mr. Redstone or NAI breached any fiduciary duties.”

Thomas' lawyer declined to comment.

Redstone, who owns the National Amusements chain of movie theaters as well as ...

Seeking to avoid mortal combat with its creditors, Midway Games filed for Chapter 11 bankruptcy protection today.

This probably isn't game-over for the Chicago game publisher. Midway has been on the brink for years. It would have tipped over had it not been for Sumner Redstone, whose family owns National Amusements, a holding company that has controlling stakes in Viacom and CBS. Redstone, who now has his own financial troubles, pumped hundreds of millions of dollars into Midway before he was forced to sell the company for pennies on the dollar last year to a little-known investor named Mark Thomas.

The sale triggered a provision in Midway's $150-million debt that allowed creditors to call in their loans -- today. Unable to fork over the cash, Midway filed for Chapter 11. The company owes an additional $70 million to Thomas and $20 million to National Amusements, for a total of $240 million in outstanding debt. Thomas, through his attorney, declined to comment for this story.

Its shares sank 9 cents, or 36%, after the bankruptcy announcement to close at 16 cents, giving Midway a market valuation of only $14.8 million.

"The credit markets have dried up so rapidly, we weren’t able to put together financing fast enough to alleviate the financial situation," said Geoff Mogilner, Midway's head of investor relations.

Ironically, the bankruptcy comes on the heels of the November release of its Mortal Kombat vs. DC Universe. It sold about 2 million copies, ranking ...