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Directors of Retailer GAME May be Forced to “Pull the Plug”

March 5, 2012 Written by Alex Osborn

Things have been rough for the video game retail chain GAME. With the recent news that they will not be stocking Mass Effect 3 and future EA titles, the truly dire state that they are in couldn’t be much worse… until now. It looks like the entire chain may be going out of business soon if recent reports are to be believed.

According to a report from UK newspaper Daily Express, it is very likely that the retailer’s directors will close down the company.

There is a real risk that GAME’s directors will pull the plug because they can’t be sure that the company can survive through the next trading season, and then insolvency becomes inevitable.

They are in discussions with their legal advisers about whether to shut up shop rather than rack up more losses.

One source close to the Royal Bank of Scotland (RBS), one of the major lenders for GAME, said the chain is running out of time.

The immediate response from RBS will be to push for more store closures, but the tipping point for the directors and the lending banks will come when the stores don’t have products to sell.

RBS will be looking for the best way to secure its position or improve it. Suppliers pulling their products is a stepping stone to administration, but the problem for RBS pulling the plug is that it will be an expensive and complex administration because Game has 1274 stores across Europe and Australia.

Lending banks will only want to consider a pre-pack administration, where there is a pre-arranged buyer, but who would want to buy GAME?

Speculation has been floating around the web that GameStop may be interested in purchasing GAME, but the company has yet to make any official announcements.

[Via]