Realtime Worlds, the Dundee-based developer of MMO All Points Bulletin, suddenly entered administration earlier this week.
Those of you who follow games industry developments will have known about this development since it broke (and for those who want more background or info on recent developments, have a look here on Develop or here on Edge). If you’re interested in why it happened, Nicholas Lovell at GamesBrief has written up an interesting early analysis here. Lastly, if you want to know about administration and what it means, have a look at my post, “What is administration?” (which featured on Gamesindustry.biz earlier this week).
As for RTW, my early thoughts from a lawyer’s perspective:
- While the purpose of administration is to try to rescue a company in severe financial difficulties, there is a lot of stigma for a company entering administration, since there is usually a perception that something must have gone fundamentally wrong with the company or its management if it couldn’t be saved.
- Moreover, entering administration (or any other insolvency proceedings, e.g. liquidation) usually has severe legal consequences: (1) banks will withdraw funding and exercise their security; and (2) suppliers and other parties with whom you have controls will (if their contracts are well drafted) use contractual prohibitions on either party entering insolvency as justification to terminate their contracts with the company. In other words, once you enter administration you can bet upon your funding and your contracts being cut, immediately. Not good. Then everyone will make a claim for all the money they’re owed and potentially even sue the company. That’s worse.
- As a result, virtually every company in financial trouble will try and do anything at all that means it can be rescued without formal insolvency proceedings being started. On that basis, I would guess that RTW has been in discussions for some time about trying to rescue itself, but clearly for whatever reason that didn’t succeed or it just wasn’t enough.
- On the other hand, RTW clearly has some valuable assets, so it may be that the administrators can rescue the company (or at least part of it) in some way, shape or form in the near future. It looks like there are already promising developments on that front.
No doubt we’ll hear more about this in the next few days and weeks, so I’ll update this post in due course.
Postscript: Rob Fahey at GI.biz has just written an interesting editorial on the impact of RTW’s fall could have on the UK games industry in the future.