The U.S. division of video game maker Atari filed for bankruptcy
protection Monday, moving to separate from its French parent company
amid a challenging financial situation.
Founded in 1972, Atari was
one of the first video game innovators, and is known for such popular
early games as Pong and Centipede. But the company has changed owners
The company said it filed a Chapter 11 proceeding
in U.S. Bankruptcy Court in Manhattan amid "adverse trading conditions
and limited development funds." Atari cited the scheduled March 31
expiration of its credit agreement with main investor and sole lender
BlueBay, and said no lending successor has been found.
The company's European operations have filed similar bankruptcy procedures in French courts, Atari said.
U.S. group expects to complete a sale or restructuring of all or most
assets within 90 to 120 days, the announcement said. Atari said the
division has approval to obtain $5 million in debtor-in-possession
financing from Tenor Capital, a firm that specializes in distressed
The group will "conduct business as usual" during the
Chapter 11 proceeding, Atari said. Robert Mattes will remain as CFO of
the U.S. entities, the firm said.
"In light of the current
situation with BlueBay, we have decided to take what we think is the
best decision to protect the company and its shareholders," Atari CEO
Jim Wilson said in announcing the filings.
Atari's U.S. operations
have increasingly shifted to focus on developing digital games and
licensing. That division has outperformed the rest of the company.
However, Atari's board in a Dec. 27 statement noted a "difficult market
environment in online and mobile games, which it said was "affecting all
In updated financial guidance issued with that
statement, Atari warned that the firm "expects to record a significant
loss" for the 2012/2013 fiscal year.
The New York bankruptcy
filing listed estimated assets of $1 million to $10 million, in contrast
with estimated debts listed at $10 million to $50 million.
of the firm's 30 largest unsecured creditors included accounting firms
Deloitte & Touche and Ernst & Young, and retailers Walmart and
Kmart. None of the creditors listed were owed more than $250,000,
according to the filing.