Atari Inc. and three affiliates file for Chapter 11 Bankruptcy on January 20, 2013
Atari Inc., known for “Pong” and “Asteroids” filed for Chapter 11, 2013 among decades of financial problems. It has been affiliated with the French company Infogrames, which changed its name to Atari S.A. in 2003. The U.S. operations have filed for bankruptcy presumably shield itself and three of its affiliates from the challenges faced by its French parent company.
In a press release it states, “With this move, the U.S.-based Atari operations seek to separate from the structural financial encumbrances of their French parent holding company, Atari S.A. (formerly Infogrames S.A.) and secure independent capital for future growth, primarily in the areas of digital and mobile games.”
Atari, Inc., Atari Interactive, Inc., California U.S. Holdings, Inc. and Humongous, Inc. filed for Chapter 11 under Case Nos. 13-10176,13-10177, 13-10178 , and 13-10179, respectively in the United States Bankruptcy Court for the Southern District of New York. The case will likely be jointly administered under Case No. 13-10176.
Atari Interactive estimates assets of $10-50 million and liabilities of under $500k, while Atari, Inc. estimates assets of under $10 million, but liabilities of $10-$50 million. The video game publisher said its shift to mobile games led to annual profits of $11 million in 2011 and $4 million in 2012 for the parent company.
The company is seeking $5.25 in debtor-in-possession (DIP) financing from Tenor Capital Management.
Hunton & Williams, LLP (led by Peter S. Partee, Sr.) is proposed debtor’s counsel.
“Pong” and “Asteroids” maker
The 31-year-old brand is known worldwide for the video games “Pong” and “Asteroids.”
Within the next months, Atari plans to sell all of its assets in a sale free and clear under Bankruptcy Code section 363. The assets include the Atari brand logo, and many of its iconic game franchises including Pong, Asteroids, Centipede, Missile Command, Battlezone, Tempest, Test Drive, and Backyard Sports.
How to take advantage of 363 sales.
Origin of the Name “Atari”
Before Atari’s official incorporation, one of its founders, Nolan Bushnell, wrote down several words from the game go, eventually choosing atari, a term which in the context of the game means a state where a stone or group of stones is imminently in danger of being taken by one’s opponent. In Japanese, atari (当たり, あたり, or アタリ) is the nominalized form of ataru （当たる, あたる, or アタル） (verb), meaning “to hit the target” or “to receive something fortuitously”. The word ‘atari’ is used in Japanese when a prediction comes true or when someone wins a lottery. Atari was incorporated in the state of California on June 27, 1972.