Telltale Games closes its doors and liquidation has begun | Tech Industry
Why it matters: Like an overly dramatic actor milking his death scene for a few extra seconds of screen time, Telltale Games closure has not been pretty nor quiet. The studio has been in its long and extended death throes since laying off 25 percent of its staff about a year ago.
However, it looks like Telltale may have breathed its final gasp as a holding company named Sherwood Partners has reportedly taken over and is in the process of liquidating the business. The holder is currently contacting creditors and looking to settle affairs. Telltale is avoiding bankruptcy court in favor of “assignment for the benefit of creditors” (ABCs), which is a much faster process.
“A company can go out of business without going bankrupt,” attorney Brandon Huffman with Odin Law & Media told GameDaily. “All that means is that they were able to find someone to give them enough money for assets to pay any creditors or they had the money on hand.”
What makes ABCs faster is it does not entail a court process. However, it does require that Telltale’s creditors agree to the arbitration-like procedure in advance. That agreement has seemingly already happened as Sherwood has been given the go-ahead to liquidate. Telltale’s games have even been disappearing from Steam.
Getting to this point seems like it took forever though. When the layoffs first began in November 2017, nobody seemed to know that the studio was on the way out. In fact, CEO Pete Hawley downplayed the move at the time saying the layoffs were part of a streamlining effort.
Things seemed fine until last September when Telltale cut another 90 percent of its workforce without notice and with no severance packages. This cut left a small crew of 25 designers that were to finish the final season of The Walking Dead. All other projects were canceled.
Co-founder Dan Connors explained that the company had been waylaid by a financing round that went sour and left the company with no capital to continue functioning. Despite the explanation, the unexpected layoffs triggered an outcry from employees and a worker’s rights group. A class-action lawsuit soon folowed alleging labor violations.
To make matters worse, former employees are reportedly going to see their COBRA coverage cut off at the end of November instead of after the typical 18 months. COBRA was designed as a safety net for terminated employees to give them time to get on another health care plan, so they don’t have a lapse in coverage. Since month’s end will see the company completely liquidated, there will be no health plan for COBRA to utilize. Telltale can probably expect lawsuits over this as well.
Even though the company is finally giving up the ghost, I somewhat doubt this is the last we will hear of it.