San Diego-based Mad Catz Interactive has filed for Chapter 7 bankruptcy liquidation. The reasons cited for this liquidation was that it could not raise additional capital or get a buyer to save it.
The difference between a Chapter 11 and Chapter 7 bankruptcy is that in Chapter 7, there is no intention to reorganize. The objective is liquidation, and thus directors and officers will vacate the company.
For almost three decades, Mad Catz was the leader in the manufacture of video game peripherals including headsets, battery packs, memory pacts, controllers and fight sticks for PC, consoles, and handhelds. The brands of Mad Catz include Mad Catz and Tritton. Tritton brand will also shut down and liquidate its assets to pay off debts to creditors.
Mad Catz is considering several options which include sale of assets, taking on more debt and even sale of the whole company. Liquidation is also an option for its foreign subsidiaries. Proceeds from the sales of assets of Mad Catz will be used to repay creditors.
The board of directors shut down the company because it failed to find a satisfactory solution to its cash liquidity problems. Also, the board and executive officers have resigned as of March 30.
Consulting giant, PricewaterhouseCoopers is now the overseeing entity for Mad Catz and will see through the liquidation of the company.
Mad Catz started in 1989, and its headquarters is in Mira Mesa despite being incorporated in Canada.
Chief Executive Karen McGinnis said in a press release, “Regrettably and notwithstanding that for a significant amount of time the Company has been actively pursuing its strategic alternatives, including various near-term financing alternatives such as bank-financing and equity infusions, as well as potential sales of certain assets of the Company or a sale of the Company in its entirety, the Company has been unable to find a satisfactory solution to its cash liquidity problems.”
In February 2016, Mad Catz retrenched 37% of its workforce. All of Mad Catz products from 2016 were reworked versions of existing Mad Catz products.
At the beginning of this year, the New York Stock Exchange gave Mad Catz a listing deficiency notice as its stock was trading very low. It reached a low price of below $0.04.
Last September, Mad Catz sold to Logitech its Saitek brand of flight and space simulation controllers. In return, it received $11 million in cash, of which $2 million was in escrow to cover any potential claims to the transaction.
In 2015, Mad Catz had a successful year because of its accessories for the Rock Band 4 video game. Things went downhill since then. Last year, sales dropped to $44.7 million and posted a $4 million loss.
Their most successful line of products was arcade sticks made for fighting games like street fighter.
In the past, it made a poor investment in game developer Harmonix which was attempting to revive its Rock Bandlicense. Mad Catz was the producer of its plastic instruments and co-publisher.