Video game innovator Atari has filed for bankruptcy in a bid to cut ties with its troubled French parent holding company.
The US branches of Atari – Atari Inc, Atari Interactive Inc, Humongous Inc and California US Holdings, have jointly filed petitions for relief under Chapter 11 of the United States Bankruptcy Code.
Atari SA and Atari Europe SAS have also filed for related procedures before the French courts
With this move, the US-based Atari operations hope to separate from the ‘structural financial encumbrances’ of its French parent holding company, Atari SA.
Instead it hopes to secure independent capital for future growth, primarily in the areas of digital and mobile games.
In a statement, Atari said that within the next 90-120 days, the companies expect to effectuate a sale of all, or substantially all, of their assets in a ‘sale free and clear’ under section 363 of the Bankruptcy Code, or to confirm plans of reorganization that accomplish substantially the same result.
These assets include not only one of the most widely recognized brand logos, but also legendary game titles including Pong, Asteroids, Centipede, Missile Command, Battlezone and Tempest.
In a statement from Atari SA, it said the company is currently profitable on an operating basis and had been paying off debt. However, as its main shareholder and sole lender, BlueBay, has been unable to find a buyer for its stake in Atari, this led to the company being ‘starved for funds and unable to finance its continued growth’
Arcade game pioneer
Founded in 1972, American video game and home computer company Atari Inc, was seen as a pioneer in arcade games, home video game consoles and home computers.
From the 1970s to the mid-1980s, Atari Inc’s games such as tennis sports game Pong and the hugely popular Atari 2600 console, helped define the computer entertainment industry and helped propel the company into the limelight.
Parent company Infogrames completed its takeover of Atari in 2008 and soon after renamed itself Atari SA.
Business to continue during bankruptcy?
A company spokesman said the Chapter 11 process is the most ‘strategic’ option for Atari’s US operations, as they look to preserve their ‘inherent value’ and unlock revenue potential ‘unrealized while under the control of Atari SA’. During this period, the company expects to conduct its normal business operations.
The US companies are also seeking approval to obtain $5.25 million from one or more funds managed by Tenor Capital Management, to allow them to continue business during the bankruptcy.