Typically, a company that files for bankruptcy in the United States is a sign of serious financial despair, in this case it’s being done as an escape route by Atari’s U.S. division, which is seeking freedom from the parent company located in France. Atari Inc., Atari Interact Inc., Humongous Inc., and California US Holdings Inc. have all filed in New York.
Gamers with a few decades under their belts will recall Atari’s position as a gaming giant in the 1970s and early 1980s. The company dominated and shaped the video game industry in many ways, but at the same time, it has weathered many storms, including the “industry crash” in 1983. In the mid-to-late 80s, the company released several unsuccessful console systems and found themselves changing focus to become a software company instead—and in 2009, the company was purchased by Infogrames, a Paris (France) based company, and changed its name to Atari SA.
While Atari hasn’t seen the success of its early days for several decades, it has managed to eke out profits and a small space in the marketplace with a number of well-received game releases. However, an issue with London-based financial company BlueBay Asset Management has prevented a number of projects from proceeding this year.
With Atari’s main operations based out of the United States, but finding themselves in conflict and under duress by their Paris parent company, the bankruptcy move is an attempt to place themselves out of reach from the Paris operations and to thus continue independently with work as normal.
You can read a little bit more about the move in this press release except from Atari U.S.:
“The chapter 11 process constitutes 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 in debtor-in-possession financing from one or more funds managed by Tenor Capital Management, a firm specializing in convertible arbitrage and special situations. Each unit has filed a number of traditional “first-day” pleadings, which are intended to minimize any disruption of their day-to-day operations.”
