Atari Files for Chapter 11 Bankruptcy
Atari, the iconic company that pioneered the video game era, has filed for Chapter 11 bankruptcy protection to “separate from the structural financial encumbrances” of its French parent company, Atari S.A. The filing, which was made voluntarily in a bankruptcy court in New York by Atari’s US-based subsidiaries (Atari Inc.; Atari Interactive, Inc; California U.S. Holdings, Inc.; and Humongous, Inc.), also seeks to “seek independent capital for future growth” in digital and mobile games.
The bankruptcy gives Atari three possible scenarios: either Atari Inc. CEO Jim Wilson restructures the company as an independent entity, sells it off in whole or in parts, or (as Los Angeles Times reported) attempts to raise funds to keep control of the company. As part of that process, Atari is seeking to secure $ 5.25 million in debtor-in-possession financing from one or more funds managed by Tenor Capital Management, which specializes in convertible arbitrage and special situations. The computer gaming company also expects to continue day-by-day operations throughout this period.
A report from Los Angeles Times reveals that while the company is currently profitable, it is not enough to keep it afloat. Atari earned about $ 4 million in 2012 and $ 11 million in 2011, which is coincidentally the same price that Infogrames (the name of the French parent before adopting the Atari branding) paid Atari in 2008. Meanwhile, revenues have been dropping really quick, as the company was down 34% in 2012 and down 43% in 2011.
The report also notes that Atari’s financing–to the tune of a $ 28-million credit facility with BlueBay–has dried up. This could mean the delay of the release of “Atari Casino,” the company’s attempt to venture into real-money gambling–something other troubled gaming companies such as Zynga are trying to explore.
Since its inception in 1972, Atari helped spearhead the “Golden Age of Arcade Video Games” with titles such as Pong, Asteroids, and Centipede. It also introduced video game consoles to consumers, bringing hours of fun right in their living room.
Source: PR News Wire and Los Angeles Times
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Tags: Atari, Bankruptcy, Chapter, Files
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