The complaint filed by Kasanoff's Threshold Entertainment seeks to protect the company from losing intellectual property rights to certain Mortal Kombat characters and the ability to create movies and television shows based on the series in the event of the sale of Midway assets to a third party, such as Warner Bros. The suit contends than no such protection is currently on record, and any sale occurring without such protections in place could result in the unjust losing of said rights.

The suit goes on to contend that it was Kasanoff who made the series into the brand it is today, taking the property and characters such as Liu Kang and Sonya blade far beyond the relative obscurity of arcades, delivering a household recognition that the series would have never seen otherwise.

In a way I suppose he is right. While those of us steeped in gaming would recognize those original digitized fighters anywhere, the movies did go a long way towards establishing the characters in mainstream culture.

If the suit is successful, it would suddenly make Midway assets a great deal less valuable to Warner Bros., perhaps halting the sale completely pending some sort of resolution. Check out the link below to view the full court document.

Kasanoff's Complaint Against Midway [Game Politics Document Dump - Main Article]

When Factor 5 filed for Chapter 7 bankruptcy on May 13th of this year, they had an estimated $50,000 to $100,000 in assets, with debt estimated at between $1 and $10 million, with 69 claims for unpaid wages in excess of $900,000. The lawsuit alleges that, prior to the filing, Factor 5 and its three founders transferred company assets to a limited liability company called Blue Harvest, now White Harvest, including original intellectual property and the partially completed code for a Wii installment of the Star Wars: Rogue Squadron series. As the employees' lawyer James Smith explains:

"We believe and have alleged in the complaint that Factor 5 and White Harvest are essentially the same company, being run by the same people, being represented by the same sets of lawyers, with all the same management and ownership and control, performing all the same work that they were doing at Factor 5, just now with a new name and a new address"

The employees are understandably upset. According to the filing, employees at the studio weren't paid after November 1st of last year, after which they were laid off with little notice on December 19th, right before Christmas.

If the allegations are true, this would mean that Factor 5 took assets that could have been negotiated in order to pay their workers and passed them over to another company to save them from sinking along with the rest of the ship.

With the defendants' lawyer declining to comment on the situation, we're currently only seeing one side of the story of course, but quiet lawyers aren't generally a good sign. We look forward to seeing how this whole thing plays out in court, should it make it there.

Employees sue bankrupt San Rafael video-game company [Marin Independent Journal via Edge]

Their newest game, Sacred 2: Fallen Angel, hit the PC last November and the PlayStation 3 and Xbox 360 ports are due out this May. But as decent as the game's been doing so far, that four year development cycle apparently murderized the company's finances.

Here's the statement posted to the developer's official site:

On Tuesday 14th April 2009, Ascaron Entertainment GmbH, Germany, went into administration at the regional court in Bielefeld, Germany.

Due to the protection offered by German administration rights, Ascaron intends to use this as an opportunity to secure the future of the company.

We, the executives of Ascaron Entertainment GmbH, thank all our fans for their superb support and assistance in making Sacred 2: Fallen Angel the success it is today.

Our special thanks go to all our employees. Without the dedication and motivation of all the staff Sacred 2 would not exist. We are also proud to announce that development of Sacred 2 on Playstation3 and Xbox 360 is now complete. Sacred 2 will be available on both formats in May 2009. We would like to wish all console gamers a fantastic fantasy experience with Sacred 2.

The server and services of Sacred 2 multiplayer and the Securom game activation are unaffected and will continue as usual. Please see the press announcement below for more information. Further updates will be provided in due course.

With kind regards,
Heiko tom Felde
Ascaron Entertainment

Sacred 2 developer bankrupt [GameSpot]

But Midway has since altered the deal, submitting a revised version to the courts to address concerns about the proposed $3.75 million in payouts going to 29 employees. One of the alterations to Midway's "Key Employee Incentive Program" was the exclusion of CEO Matt Booty from eligibility of those payouts, reducing the number of folks who could potentially benefit to 28.

According to Midway reps, this isn't just a windfall opportunity for the publisher's suits. "The majority of the people in here are the rank and file [product development] guys," the kind of people potential buyers or employers might want to keep.

Midway also removed the mention of Wheelman from the deal.

The Vin Diesel-starring game, which has been released as part of a deal between Ubisoft and Midway, was attached to a bonus incentive that creditors and the trusted found unsavory. That's because the deal had already happened quite some time ago, meaning folks would've have gotten paid under the arrangement for something that was a done deal.

Mention of Mortal Kombat has also been removed from the agreement, as it's logically the most attractive, possibly least tarnished of Midway's properties. The milestone previously attached to the sale of Mortal Kombat has been altered to include the company's assets—possibly all of them—to the tune of a committee approved "target cash amount."

That means someone may have to snap up rights to Narc, Smash TV and Area 51 for certain bonuses to be paid out. Not implying that Smash TV rights would be a bad thing, just likely unprofitable unless in the right hands.

Late last year, Sumner Redstone sold his controlling interest in the failing Midway Games to industry unknown Mark Thomas for the sum of $100,000 plus debt. The sale led to creditors being able to demand immediate repayment for the $150 million they were owed, which ultimately resulted in Midway filing for bankruptcy last month.

With us so far? Here's where things get fishy.

Part of Redstone's agreement with Mark Thomas granted him preferred debt - debt that takes precedence over any other. To Midway's slighted creditors, this means that any large amount on money brought in to the company, say from the sale of a major franchise like Mortal Kombat, could result in Thomas earning a $30 million paycheck on his initial $100,000 investment.

Now lawyers want to know more about what went on during the Redstone/Thomas deal, and have subpoenaed Sumner and his daughter in order to get to the bottom of what looks like a rather shady situation. Shari in particular has been ordered to turn over any and all communications between her part and Thomas', and all documentation passed between the two.

The father and daughter will be deposed at a private law firm in New York on March 19th.

Sumner Subpoenaed Over Midway Games Bankruptcy [The Business Insider - Thanks Ttocs!]

The voluntary petition for reorganization under Chapter 11 effects all of its U.S. subsidiaries, but none of its international ones.

"This was a difficult but necessary decision," said Midway Chairman, President and CEO Matt Booty. "We have been focused on realigning our operations and improving our execution, and this filing will relieve the immediate pressure from our creditors and provide us time for an orderly exploration of our strategic alternatives. This Chapter 11 filing is the next logical step in an ongoing process to address our capital structure."

"Midway enters this process with strong underlying fundamentals, as evidenced by solid fourth quarter sales that exceeded expectations in spite of a challenging retail and general economic environment," Booty added. "Overall, Mortal Kombat vs. DC Universe sales are approaching two million units shipped, TNA iMPACT! has shipped approximately one million units, and our Game Party franchise has sold close to three million units in total."

The publisher and developer said it expects the protection will help the company conduct business as usual, but it needs permission from the court before it can move forward. Chapter 11 means they want to keep operating, chapter 7, which they didn't file, means they are liquidating.

MIDWAY'S U.S. OPERATIONS FILE FOR CHAPTER 11 REORGANIZATION

The move would allow the company to retain control over its operations while it reorganizes to pay its creditors.

We searched the filings for U.S. District Court in the Southern District of Ohio but could find nothing under Brighter Minds Media or the attorney said to represent them. But if it was filed late Friday it may not show up in the system until Monday or later.

World of Goo was the big hit out of Brighter Minds' family friendly catalog of titles last year. It took top indie game honors at the 2008 Video Game Awards, and also won the prize for design innovation and technical excellence at the 2008 Independent Games Festival. It was our runner up for best indie game.

It was also popular among pirates; released DRM-free, developer 2D Boy estimated that it suffered from a nearly 90 percent piracy rate.

World of Goo Publisher Brighter Minds Media Goes Bankrupt [GameDaily BIZ via Joystiq

The troubled company had been trying to find a buyer or secure financing in order to stay afloat, but today they announced that their last-ditch attempts had failed.

"This is the only possible path for our company," James A. Marcum, acting chief executive, said in a statement. "We are extremely disappointed by this outcome."

The closing of the remaining 567 stores could mean unemployment for another 30,000 Americans at a time when being unemployed is not something you want to be. It's also another blow to the nation's malls, as the closures will result in a flood of empty big box retail locations in an economy where no one is in a position to fill them.

"It will bring to market a glut of big box spaces across the country," said John Bemis, head of Jones Lang LaSalle Inc.'s retail leasing team. "It will have one of the largest impacts on big box real estate across the country."

Troubling news indeed. Our condolences to those who will be left jobless in the wake of the closures. We wish them the best of luck in finding gainful employment elsewhere.

Circuit City to liquidate remaining US stores [San Francisco Chronicle]

Yeah, I don't have a chance in hell of qualifying for this.

The card comes in your choice of thirteen stylish designs featuring the various races of Azeroth, and as an introductory offer you get a free month of game time and a 0% APR for the first year.

So as predicted over a year ago by Make, magic plastic money and magic plastic Night Elf girls have merged. It might not be linked to virtual currency yet, but I've a feeling now that it's only a matter of time. Michael Fahey

World of Warcraft Visa [World of Warcraft]

Holy shit!

Lik-Sang.com, the popular gaming retailer from Hong Kong, has today announced that it is forced to close down due to multiple legal actions brought against it by Sony Computer Entertainment Europe Limited and Sony Computer Entertainment Inc. Sony claimed that Lik-Sang infringed its trade marks, copyright and registered design rights by selling Sony PSP consoles from Asia to European customers, and have recently obtained a judgment in the High Court of London (England) rendering Lik-Sang's sales of PSP consoles unlawful.

As of today, Lik-Sang.com will not be in the position to accept any new orders and will cancel and refund all existing orders that have already been placed. Furthermore, Lik-Sang is working closely with banks and PayPal to refund any store credits held by the company, and the customer support department is taking care of any open transactions such as pending RMAs or repairs and shipping related matters. The staff of Lik-Sang will make sure that nobody will get hurt in the crossfire of this ordeal.

The lawsuits they are talking about, by the way, involve Sony's attempts to make gray market imports of console systems illegal, especially in Europe. The way they did this was by filing a suit in every single frickin' EU country... essentially bleeding Lik Sang to death. You can see the writing on the wall in Lik Sang's statement:

"Fighting multiple lawsuits in different countries at the same time and paying high premiums to expensive lawyers is an overwhelming situation for a small company like Lik-Sang. Launching separate court actions with separate claims and different judges is completely unnecessary, except for the fact that it helps reaching one single target: outspend Lik-Sang to death. 'Pay Beyond.'"

Sony. What a bunch of scum bags. Lik Sang was a fine, fine company. Florian Eckhardt

Edit: Thanks to Mallika for pointing out it gets even worse...

Furthermore, Sony have failed to disclose to the London High Court that not only the world wide gaming community in more than 100 countries relied on Lik-Sang for their gaming needs, but also Sony Europe's very own top directors repeatedly got their Sony PSP hard or software imports in nicely packed Lik-Sang parcels with free Lik-Sang Mugs or Lik-Sang Badge Holders, starting just two days after Japan's official release, as early as 14th of December 2004 (more than nine months earlier than the legal action). The list of PSP related Sony Europe orders reads like the who's who of the videogames industry, and includes Ray Maguire (Managing Director, Sony Computer Entertainment Europe Ltd), Alan Duncan (UK Marketing Director, Sony Computer Entertainment Europe Ltd), Chris Sorrell (Creative Director, Sony Computer Entertainment Europe Ltd), Rob Parkin (Development Director, Sony Computer Entertainment Europe Limited), just to name a few.

Important Notice: Lik-Sang.com Out of Business due to Multiple Sony Lawsuits [Lik Sang]

Final Bankrupted Acclaim Assets Due For Auction [Gamasutra]