Midway Games today announced that it has entered into a "stalking horse" asset purchase agreement with Warner Bros. Entertainment Inc., and filed a sale and bid procedures motion with the Bankruptcy Court.

A stalking-horse bid is an initial bid on a bankrupt company's assets from an interested buyer chosen by the bankrupt company. This bid then sets the bar so that other bidders can't low-ball the purchase price.

The initial bid is $33,000,000. Under the agreement, Warner Bros. Entertainment would acquire substantially all of the Company's US assets including its Mortal Kombat franchise and its development studios in Chicago and Seattle. The agreement does not include the Company's development studio in San Diego and the TNA franchise games, nor does it include the Company's development studio in Newcastle (Wheelman).

Other interested parties will be offered the chance to bid on the Company's assets