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THQ owes workers a lot of money including a composer for Saints Row 4

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I’ve been reading through THQ’s bankruptcy filing and came across some interesting information about half way through the report. The section is called “Workforce Compensation Obligations” and it details how THQ employees, contractors and temporary workers are compensated for their contributions. Each subsection of this topic reveals how much money THQ owes in unpaid salaries and wages prior to filing for chapter 11 bankruptcy. The numbers are pretty high.

The filing says THQ has 354 salaried employees and 108 hourly employees. They are paid every two weeks on Friday, and were last paid on December 14. The next pay period is December 28. Unfortunately, THQ still owes its employees $415,403 in “accrued and unpaid prepetition salaries and wages.”

98% of its employees are paid via direct deposit through a payroll services company called ADP. THQ pays ADP $6,000 a month. However, THQ is in debt with ADP to the tune of $2,822.

Let’s move on the temporary employees. Temporary workers are usually introduced to THQ through an employment agency. The employment agencies are the ones that pay employees and withhold the appropriate amount of taxes for each pay period. Even though THQ didn’t pay temporary workers directly, it still owes $253,354 “in respect of the prepetition services of the temporary employees.” THQ currently has 78 temporary workers at the company.

Independent contractors come on-board as being self-employed. THQ pays them for a job and leaves it up to the contractor to handle things such as taxes, health care and other financial obligations. It’s not an uncommon practice. As of now $94,036 is owed to independent contractors. One of those contractors is a composer for Saints Row 4. THQ will owe this person $25,000 “for services rendered within 90 days of the petition date.” THQ CEO Brian Farrell wrote in the filing, “I believe that it would be extremely difficult to replace him given then debtors’ present circumstances. If the debtors fail to promptly pay such independent contractor the unpaid prepetition compensation he is owed, it is likely that he will cease working for the debtors.”

It doesn’t end there. THQ has a responsiblity to pay for things such as employee bonuses, employee business  reimbursements, unpaid vacation time and unused vacation time. The vacation debt alone is worth $2,638,849. THQ knows unpaid employees will have a negative impact on the business. These lines from the filing says it all.

“I understand that most of the debtors’ employees rely exclusively on their compensation, benefits, and reimbursement of expenses to satisfy their daily living expenses and maintain their health and well-being. Consequently, these employees will be exposed to significant financial difficulties if the debtors are not permitted to honor the employee obligations. In the absence of such payments, the debtors believe that their employees may seek alternative employment opportunities. This would hinder the debtors’ ability to develop quality product and meet scheduled release dates, and likely diminish creditors’ confidence in the debtors.”

THQ needs the court to approve its petition so it can pay employees the money it owes from cash advances it can get from Wells Fargo and Clearlake. If it get those loans, THQ will “have sufficient cash to pay the amounts described.”

Source [THQ Filings]

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