Judge Tosses Shareholder Suit Against Midway Board

A federal judge reluctantly threw out a creditor claim against the former board of Midway, which alleged that the debt-saddled company pursued loans it couldn't pay and arranged a sale that screwed company stakeholders while enriching a well-connected few.

"The defendants oversaw the ruin of a once highly successful company, only to hide behind the protective skirt of Delaware law, which the court is bound to apply," U.S. Bankruptcy Judge Kevin Gross wrote in his Jan. 29 ruling.

Creditors alleged that Midway's directors, majority shareholder Sumner Redstone, drove the company into deepening debt and then engaged in fraudulent sale of corporate assets when the company was sold to investor Mark Thomas in 2008. The creditors wanted that sale nullified, plus a $90 million payment.

There is a lot more legalese and finance regarding this sale in a story filed by Bloomberg, but the bottom line: Midway still belongs to Thomas.

Redstone, Board Win Dismissal of Midway Creditor Suit (Update1)
[Bloomberg, thanks Mehar G.]