Creditors at Midway Games have launched a lawsuit against former Midway owner Sumner Redstone and his company National Amusements Inc, claiming that the firm was hurt when Redstone sold his 87 percent stake in it for $100,000.
Bloomberg reports than an official committee of unsecured Midway creditors filed a complaint yesterday with the US Bankruptcy Court in Wilmington, Delaware.
The complaint claimed that the November sale – when Redstone handed over the business to Mark Thomas – generated more than $700 million in tax losses for Redstone, enabling him and his company to obtain a “massive” tax refund.
“The transaction caused Midway irretrievably to lose the ability to take advantage of its valuable accumulated net operating losses and other tax assets,” the creditors committee said.
The creditors accuse Redstone, the chairman of CBS Corp. and Viacom Inc., of fraudulent transfer and breach of fiduciary duty, and they seek unspecified damages.
“This suit is completely without merit,” Brandy Bergman, a spokeswoman for National Amusements, said to Bloomberg. “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.”