Earlier this morning it was confirmed that Atari Interactive Inc., Humongous, Inc. and California US Holdings, Inc. have filed petitions to enter chapter 11 bankruptcy under the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. Here are the details of the filings as released today. 

 

While filing for Chapter 11, the U.S.-based Atari operations wish to avoid the financial responsibilities of their French parent holding company, Atari S.A. (which was formerly Infogrames S.A.). This could potentially allow the U.S. division to secure independent capital which could lead to the U.S. division becoming an independent entity. The U.S. division would focus “primarily in the areas of digital and mobile games” according to Atari’s press-release.

 

Atari released the following plan to restructure the American division of the company in a press-release sent out earlier today stating:

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, which is familiar to 90% of Americans, according to a recent survey, but also legendary game titles including Pong®, Asteroids®, Centipede®, Missile Command®, Battlezone® and Tempest®. Other recognized brands include Test Drive®, Backyard Sports® and Humongous®.

 

Under current management, Atari Inc. has shifted its business from traditional retail games to digital games and licensing with an increased focus on developing mobile games based on some of Atari’s most iconic and enduring franchises. With these moves, the company has added new revenue models, including digital download and advertising. As a result, Atari Inc. has become a growth engine for Atari S.A., which in turn has reported consecutive annual profits in 2011 and 2012.

Atari has seen quite the comeback in recent years, relaunching their classic titles on Android and iOS compatible devices. Atari has current plans of launching new titles this year from their ‘Rollercoaster Tycoon’ franchise and a new ‘Atari Casino’ game.

 

Chapter 11 is a financial decision that many companies make in the United States, allowing the company to restructure their assets and gain capital while temporarily relieving themselves from their current debt. Atari states that the company “expects to conduct its normal business operations” during this time according to a press-release sent out earlier today.

 

It was also confirmed that Atari wishes to secure $5.25 million in “debtor-in-possession financing from one or more funds managed by Tenor Capital Management”.