Acclaim may file for Chapter 7 liquidation - reports

No official statement or filing has yet been made regarding the future of embattled publisher Acclaim, but sources at the company and media reports alike have indicated that the firm intends to plan for Chapter 7 liquidation.

Under the terms of Chapter 7 bankruptcy, Acclaim would cease operations, liquidate its remaining assets and use the proceeds to pay back as much of its substantial debt as possible - although creditors are unlikely to see anything close to the full amount of their debts.

This is a much more final solution than the Chapter 11 bankruptcy which was being mooted by sources at the company late last week; Chapter 11 would have allowed Acclaim to continue trading while an effort was made to restructure its debts.

Employees at the company remain in the dark as to the future of their jobs, with the majority of the firm's staff being locked out of their offices and told to remain at home so far this week - but so far, while some staff claim to have been told to collect personal belongings from the offices, it's not thought that any official redundancies have been made.

The possible effects of Acclaim going into liquidation are hard to gauge at this point. Aside from the obvious impact on the 600 people directly employed by the company, it's thought that Acclaim has significant debts to a number of other firms in the industry along with its now-expired credit line with primary lender GMAC Commercial Finance, most of which will have to be written off as bad debt.

The company also has a number of complete or near-complete titles on its books, including forthcoming racer Juiced, which has had a largely positive critical reaction so far. It's likely that Juiced, along with any other titles of value, will be picked up by other publishers, but for now at least, their fate is uncertain.