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A talented staff can be a company’s greatest asset but in tough times it can also be a significant liability. It comes down to motivation and retention. Can employees be kept happy and on the job or will they flee to a more stable, more certain work environment if possible?

Midway Games (MWY), which is struggling to survive a bankruptcy restructuring, is facing these very issues and the prognosis is not great, so far.

The company’s looking at asset sales and other tough choices in order to find a way to service nearly $240m in debt.

Employees working today could be out of a job in two, three or six months. (They could also find themselves part of a stronger, recapitalized company but it’s a gamble.) Each has to decide whether to look for a life raft, or try and keep the ship afloat.

New rumors suggest door number one may be becoming the more popular choice. Several reports circulating over the weekend said a large chunk of the team behind the company’s flagship Mortal Kombat series is in discussions to leave en masse and start anew under another publisher’s umbrella.

At this point, the story is unsubstantiated but the plausibility factor is reasonably high.

It’s worth noting as a counterpoint, however, that many of these same developers are owed bonuses for prior work that the creditors committee has thus far not paid. It’s possible that the rumors of a mass exodus are accurate but it’s equally plausible the details (or prospect of) a large staff defection were leaked intentionally to try and push the creditors to sign some checks.

The trouble is, like the employees, the creditors behind Midway aren’t in a good position either. They stand to lose millions. And while they need the help of the remaining employees to minimize those losses, each dollar spent is money out of their coffers that may not come back. Every expense represents the prospect of throwing good money after bad.

So, creditors need to decide if an employee’s salary (however uncertain its future) is enough incentive to get things done or if it’s worth paying out something more on a milestone-basis to align the interests of the two sides. So far with Midway, creditors are taking a firm stance. If the rumors prove accurate, the company’s employees are answering back by marching to the exit door.

Source: Will Midway's Employees Choose to Jump Ship or Right the Ship?