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Default JoWooD - Materially Insolvent!

January 7th, 2011, 18:06
JoWooD is on the brink. Their adhoc:
[adhoc]: JoWooD applied for a procedure of capital reorganization
Vienna, Austria, 7 January 2011; The management board of JoWooD Entertainment AG announces that all efforts towards restructuring of capitalization concerning outside capital as well as equity capital had to be considered as failed on 06/01/2011. On the basis of this fact, material insolvency occurred with this date.

Therefore today, JoWooD Entertainment AG applied for a procedure of capita lreorganization at the Commercial Court Vienna in accordance with Art. 167 IO/ Insolvency Statute.

Bond creditors of the 10% bond 2007-2011 (ISIN: AT0000A05TV0) are asked to report directly to the company (see queries reference) to be able to coordinate their rights.

The management board assumes that negotiations with creditors and possible investors can be positively conducted and finalized within 90 days and thus continuation of the company can be assured.
More information.
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January 7th, 2011, 18:06
Serves them right for ruining the Gothic franchise and the way they treated customers and Piranha Bytes. I can only hope they'll be gone for good.
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January 7th, 2011, 18:16
The only ones hurt will be people who work there & lose their jobs and most likely had nothing to do with ruinous decisions. The board members on the other hand will move on to some other profitable projects.
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January 7th, 2011, 18:17
Hopefully this will be the final nail in the coffin for a company that has always released the most buggiest piece of crap in pc history. Piranha bytes was smart to leave JoWooD.

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January 7th, 2011, 18:22
Originally Posted by zadokAllen View Post
The only ones hurt will be people who work there & lose their jobs and most likely had nothing to do with ruinous decisions. The board members on the other hand will move on to some other profitable projects.
Exactly. Isn't this a wonderful world?!
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January 7th, 2011, 19:01
Originally Posted by zadokAllen View Post
The only ones hurt will be people who work there & lose their jobs and most likely had nothing to do with ruinous decisions. The board members on the other hand will move on to some other profitable projects.
What about the creditors and shareholders? The whole point of an insolvency/bankruptcy is that the company has liabilities that exceed assets. This is fundamentally dealt with by diluting the ownership of the shareholders (which hurts them) and paying off creditors in a prioritized order (which hurts the creditors who don't get all of their money back).

It's also likely that the employees who lose their jobs will, like the board members, get new jobs elsewhere — and if they're at a more functional company they'll be better off.
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January 7th, 2011, 19:06
Does this mean anything for the Arcania expansion, the Forsaken Gods community patch, or Spellforce 2 Faith in Destiny? Or too early to say?

I can't say I was particularly excited about any of them, but I'd rather have them than not.
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January 7th, 2011, 19:39
Originally Posted by khaight View Post
What about the creditors and shareholders? The whole point of an insolvency/bankruptcy is that the company has liabilities that exceed assets. This is fundamentally dealt with by diluting the ownership of the shareholders (which hurts them) and paying off creditors in a prioritized order (which hurts the creditors who don't get all of their money back).
Investors or institutions who become creditors and shareholders of a company do so of their own volition and based on their assessment of the premium that they can potentially earn for taking on the risk involved. So IMO, if they lose out its their own fault and they are very likely to be able to deal with it and move on. However, the employees are the only ones that are truly innocent and will ultimately suffer the most, particularly those who were granted some form of equity interest in the company in lieu of other compensation.
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January 7th, 2011, 19:45
Originally Posted by khaight View Post
What about the creditors and shareholders? The whole point of an insolvency/bankruptcy is that the company has liabilities that exceed assets. This is fundamentally dealt with by diluting the ownership of the shareholders (which hurts them) and paying off creditors in a prioritized order (which hurts the creditors who don't get all of their money back).

It's also likely that the employees who lose their jobs will, like the board members, get new jobs elsewhere — and if they're at a more functional company they'll be better off.
Shareholders gamble on company`s well being - as such it`s tough luck, sorry guys. They took calculated (well ;) risk. It`s not as this collapse happened overnight, there were enough warning signs these guys are running the company to the ground. As for creditors - I agree, this might really hurt some companies that are being owed money. (Unless you mean investors - they`re in the same bag as shareholders)

Sure, most of the employees will find other, perhaps better, jobs. But don`t compare them to minted board folk, some of whom might not even register they lost a seat because they simultaneously hold ten others elsewhere.

PS: Kudos to Dagoo7 above: puts this point across much more eloquently :)
Last edited by zadokAllen; January 7th, 2011 at 19:47. Reason: Hivemind! :)
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January 7th, 2011, 20:03
Originally Posted by zadokAllen View Post
The only ones hurt will be people who work there & lose their jobs and most likely had nothing to do with ruinous decisions. The board members on the other hand will move on to some other profitable projects.
Its always like that. Talented know how people are governed by clueless money-greedy jocks.
We live in sad state of affairs.
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January 7th, 2011, 20:15
Originally Posted by dagoo7 View Post
Investors or institutions who become creditors and shareholders of a company do so of their own volition and based on their assessment of the premium that they can potentially earn for taking on the risk involved. So IMO, if they lose out its their own fault and they are very likely to be able to deal with it and move on. However, the employees are the only ones that are truly innocent and will ultimately suffer the most, particularly those who were granted some form of equity interest in the company in lieu of other compensation.
Um, I'm pretty sure that people who become employees of a company also do so of their own volition, and based on their own assessment of the costs, benefits and risks involved. Anybody who has ever received a job offer from a start-up company knows about that. Anybody who takes a job without thinking hard about the long-term stability of the company in question isn't doing their due diligence. And employees who choose to take equity in place of salary in their compensation plan *are* shareholders, and the extent to which they are hurt through that equity is exactly the extent to which all shareholders are hurt.

Employees are also capable of assessing the trajectory of a company on their own. They may be in a better position to do so than outside shareholders: they're often closer to actual operations, and they feel the impact of bad management directly. I have been in the position of working for a failing company; when I decided that it had no future I changed jobs. It took them another two years to finally crater all the way in. Those who think and plan do better than those who don't, whether they're on the board of directors or not.

What I object to is the notion that the employees are all innocent victims and the board members/senior managers are all corrupt and venal. As an employee I resent the implication that I have no control over my own work life, and I know from observation that there are a lot of good senior executives who work their assess off for the success they have. The business world is a lot more complicated than simple class-warfare rhetoric would suggest.
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January 7th, 2011, 20:59
Originally Posted by khaight View Post
Um, I'm pretty sure that people who become employees of a company also do so of their own volition, and based on their own assessment of the costs, benefits and risks involved. Anybody who has ever received a job offer from a start-up company knows about that. Anybody who takes a job without thinking hard about the long-term stability of the company in question isn't doing their due diligence. And employees who choose to take equity in place of salary in their compensation plan *are* shareholders, and the extent to which they are hurt through that equity is exactly the extent to which all shareholders are hurt.

Employees are also capable of assessing the trajectory of a company on their own. They may be in a better position to do so than outside shareholders: they're often closer to actual operations, and they feel the impact of bad management directly. I have been in the position of working for a failing company; when I decided that it had no future I changed jobs. It took them another two years to finally crater all the way in. Those who think and plan do better than those who don't, whether they're on the board of directors or not.

What I object to is the notion that the employees are all innocent victims and the board members/senior managers are all corrupt and venal. As an employee I resent the implication that I have no control over my own work life, and I know from observation that there are a lot of good senior executives who work their assess off for the success they have. The business world is a lot more complicated than simple class-warfare rhetoric would suggest.
I don't disagree with anything you say here, and my original post clearly papered over and overstated/oversimplified this in my effort to address the shareholder/creditor issue. Obviously employees are investing their time and future in a company and must take responsibility for assessing their employers and the opportunities/risks associated with them. However, there is often less agency available to individual employees than to institutions or investors that are purely making calculated investments.

For example, in my case I work in a very niche industry and my opportunity for switching employers is very limited unless I decided to start fresh in a new industry, effectively relinquishing the value of the experience and work I have done in this field and starting over. Similarly for an employee with a family that is tied to a specific region, taking a new job that may require relocation involves more than a simple assessment of financial risk/reward. All of this is obviously complicated further by the current state of the economy. So yes employees are not wholly innocent participants of virgin birth, but they often do have less control or agency than pure investors in the debt or equity securities of a company.

It is also true that employees whether prospective or current are frequently not kept apprised of what is actually going on underneath the hood. And this lack of transparency can be a factor even if a company is public, and much moreso if private. If I am a potential creditor, I would expect to have full details on financial information and strategy before entering into a transaction. If an employee wen to their senior mgmt and asked them to open the books, I don't believe they would get the same response.

Edit: BTW I also did not imply that board members or management are corrupt or venal (or even mention management at all). However, it is true that management can often be inept, misguided, or plain delusionary, just as employees can be ineffective or unproductive. Management can also be extremely effective and doing their best to right a sinking ship as well as have a very material stake in the outcome. I think what others may have been trying to say is that management often escape somewhat more unscathed (or at least have a much more generous cushion) when a business venture fails disastrously, even if this is due at least partially to their own faults or mistakes.
Last edited by dagoo7; January 7th, 2011 at 21:20.
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January 7th, 2011, 21:45
Originally Posted by khaight View Post
Um, I'm pretty sure that people who become employees of a company also do so of their own volition, and based on their own assessment of the costs, benefits and risks involved. Anybody who has ever received a job offer from a start-up company knows about that. Anybody who takes a job without thinking hard about the long-term stability of the company in question isn't doing their due diligence. And employees who choose to take equity in place of salary in their compensation plan *are* shareholders, and the extent to which they are hurt through that equity is exactly the extent to which all shareholders are hurt.

Employees are also capable of assessing the trajectory of a company on their own. They may be in a better position to do so than outside shareholders: they're often closer to actual operations, and they feel the impact of bad management directly. I have been in the position of working for a failing company; when I decided that it had no future I changed jobs. It took them another two years to finally crater all the way in. Those who think and plan do better than those who don't, whether they're on the board of directors or not.

What I object to is the notion that the employees are all innocent victims and the board members/senior managers are all corrupt and venal. As an employee I resent the implication that I have no control over my own work life, and I know from observation that there are a lot of good senior executives who work their assess off for the success they have. The business world is a lot more complicated than simple class-warfare rhetoric would suggest.
While the boards of directors of comporations are often comprised of investors or investment fund representatives who have only a small portion of their capitol at stake in any one venture - it is right to point out that this is not true for all companies. Some of the board members of Zenimax for example are not there because they are outside investors (though if you look at the list of members you can spot quite a few who are investment moguls). Some of them are there because when the companies they created with their own hands were incorperated or purchased by a larger company part of the process included sufficient voting stock in the company to warrant a seat on the board. This is more common than you may think as investors do prefer to invest in companies where at least some of the board members are dedicated to the operations of that company- a board wholly comprised of dispassionate investors with large portfolios will not be focused on day to day operations and minutia and therefore not be as well apprised of the true performance of their investment.

So as far as how much you can blame a board of directors for running a company into the ground is about as much as you can credit them for the success of the company - which is to say it is less than you probably think. Even boards of smaller creative companies with some members who may have been responsible for its founding aren't really pulling the levers that direct the ship of industry. They have final authority on many matters but ultimately the operation of the company relies on the decisions and good faith of the executive officers.

Compared to a graphic artist, coder, or "founding" board member (think semi retired guy who built the place up from the ground as opposed to outside investor - most boards have someone like that or one of their kids but they're usually a small minority of the board itself) the executive officers CAN be the most mobile, most priveleged to information about the true health of the company, most protected when it fails, and most able to avert such failure.

While I'll agree that these arguments tend to be over colored with the cliched rhetoric you take offense at- I can see how it looks to many here like you are trying to establish a false equivalency between the few at the helm and the individual employee in general. While personal responsibility and self-determination are realities at all levels, it is disingenuous to suggest there is not unequal mobility and responsibility.

1) Employees can not diversify their employment portfolio. Your eggs are all in one basket for the most part and any savings you have accumulated are still derivative of that one primary source of income. Dividing your time among several companies would be the equivalent risk management that investors are able to do - were it a viable option. In fact most employees in jobs from Radioshack salesman to Cisco network engineer will sign broad non-compete clauses that further.

2) Depending on bankruptcy and restructuring laws, employee compensation packages such as general pension funds can, and often are, the least protected asset during restructuring. The compensation packages for executives on the other hand tend to be guaranteed much more rigorously under the language in their employment contracts- to the point where executives who are removed for incompetence by the board for bankrupting the company will still retain the majority of their severance packages.

3) While employees who pay attention should have a general idea as to the health of a company - executive officers are the first to know and have some (legally limited) control over when the full reality of a company's troubles are made known. That's part of the idea behind the much hated golden parachute. In theory their stock in the company (when market and financial regulators aren't asleep or high) should be the least mobile as any early selling on their part would bring immediate suspicion after the fact. Unfortunately it doesn't seem like the watchdogs are at their posts unless it involves Martha Stewart or you happen to be responsible for brownouts in the most populus state in the US (sorry I'm not as familiar with how well the regulators do their job elsewhere.)

The thing is though… we don't know if any of that applies to the board of JoWood or its executives. Their executives may not have golden parachutes. Their board of directors is probably not very much involved with the day to day operations and probably does not make the kinds of decisions that sunk the company besides their hiring choices.

If they are structured like most US corporations, then yeah it would be right to say the executives and the board members are far less hurt by the failure of a company they commanded legal and operational responsibility for. Are they - seriously anyone work there or know someone who can answer that? Also, anyone able to say at which decisions were the ones that sunk them? Is it the fault of the board for hiring executives who could not steer the business well or is it the fault of the project directors/middle managment who seemed to have a similar theory on QA as Bethesda does at times? Yeah- it is far more complex than just saying "The people in charge screwed it up and get to walk away with millions" but it's not hard to see why that seems to be the case far to often.

Of course that just might be because nobody cares about a news story "Borkerage firm collapses under the weight of mild incompetence distributed randomly through their ranks and all are greatly inconvenienced at the loss of their job." I bet that would be a more accurate headline for most bankruptcies of smaller corporations. Still, when a ship runs aground it's the captain whose supposed to hang his head in shame and not the entire enlisted crew from deckhand to assistant cook.

/rant - sorry about that
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January 7th, 2011, 21:55
Originally Posted by khaight View Post
Um, I'm pretty sure that people who become employees of a company also do so of their own volition, and based on their own assessment of the costs, benefits and risks involved.
I disagree. Here in Germany it isn't easy to find a job in a more or less nonexistend video games "industry".

Compared to other countries, Germany's, Austria's and connected country's "gaming industry" is tiny. It is therefore not easy to find a new job - to found a new studio is possibly even better, but consodering how - compared to other countries - sparse the supporting money from institutions is, this could be hard, too.

This is how I see it, but keep in mind that I don't have any "inside knowledge" of the German "gaming industry".

Markets are different.

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January 7th, 2011, 22:10
This is what happens when the leaders of a company consistently make poor decisions. I don't know all that much about Jowood other than their involvement with the Gothic series, but seeing how they went about making decisions with the Gothic series, this really is no surprise.

This will perhaps put the final nail in the coffin of the debate, 'who was behind the bad Gothic decisions, Jowood or PB?' Looks like Jowood wins…

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January 7th, 2011, 22:55
Get in!

Good riddance. They deserve more than that after killing our baby (Gothic 3) raping it's corpse (FG) and making fun out of it (Arcania).

/fanboi rant

Could that mean that Arcania wasn't the success the expected it to be? Why work on an expansion then?

I'd just like to interject here and point out that I'm not going to say anything to spoil the mood, Chief. I'll just float here and watch. Don't mind me, just sitting here, floating and watching, that's me.
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January 7th, 2011, 23:06
I'd rathr guess that Arcania was delivered too late to be able to stop these financial troubles.

Maybe they are trying of get a kind of "breathing space" by sueing Koch Media.
Just a little bit more time to get revenues of Arciana, they might think, perhaps …

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January 7th, 2011, 23:14
I'm tempted to say "And nothing of value was lost."
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January 7th, 2011, 23:49
Well, I disagree, but only on a personal basis, because JoWood wanted to publish the adventure game called "Haunted", of which i plyed the Demo on the Games Com 2009 … And I still want to see it published … With a little luck dtp buys it and publishes it instead … Or Kalypso, or Daedalic …

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January 8th, 2011, 00:36
Well, I was only half-serious. There's plenty of reason to dislike them *now*, and some would say it's best if they go down before they manage to ruin another series while trying to save themselves - but - if this happened during the Gothic 2 times, I'd probably be worried about it.
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