Chicago-based developers Midway have today filed for bankruptcy with Chapter 11 protection.

Current CEO Matt Booty has stated: “Midway enters this process with strong underlying fundamentals, as evidenced by solid fourth quarter sales that exceeded expectations in spite of a challenging retail and general economic environment.”

This news comes as no surprise to most industry analysts, as the Mortal Kombat developers dropped 25% of their staff in December 2008, and reportedly have debts of up to US$240 million.

Midway's shares dropped 40% in morning trading.