Atari Ends Struggle, Files for Bankruptcy in France and the US

Atari, the pioneering video game company that created Asteroids and Pong, has filed for bankruptcy protection in France and the US, setting the stage for the sell-off of its distinctive logo and the rights to its classic games.

The company said it expects its US business to sell or restructure all of its assets in the next four months.

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Atari’s main shareholder and sole lender, BlueBay, could no longer provide financial support, prompting the oldest brand in video gaming to look for a buyer. Atari owes about €21 million (₤17.7 million) to BlueBay, with the balance due on March 31.

The US unit, which filed a Chapter 11 bankruptcy process, will continue to conduct normal business operations during the transition period. The company has approved $5 million (₤3.2 million) of debtor-in-possession financing from Tenor Capital Management, a firm specialising in distressed lending.

Atari SA filed for bankruptcy in front of the French courts, under Book 6 of the French Commercial Code. The game-maker’s share price has collapsed from a high of €1,504 in 2000 to less than €1 when the stock was suspended from trading on Monday of this week.

Atari Interactive wants to break free from Atari SA and find a buyer to take the company private. The US operation has managed to shift its business from retail games to digital games and has helped prop up the parent French outfit, which has been struggling financially for years.

Some of the popular digital games titles released by Atari on mobile platform include Greatest Hits, Breakout, Outlaw and Android Gunner. The company has previously announced upcoming mobile and tablet games based on the Rollercoaster.

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In a statement the companies said: “The US-based Atari operations seek to separate from the structural financial encumbrances of their French parent holding company, Atari SA … and secure independent capital for future growth, primarily in the areas of digital and mobile games.”

According to Bloomberg, Atari also requested court permission to pay pre-filing wages and benefits to its 48 employees, four of whom are paid by the hour. According to court documents, average semi-monthly payroll at the company amounts to $258,600 (₤163,000). About $90,000 (₤56,900) of those wages will likely remain unpaid after the bankruptcy filing.

Jim Wilson, chief executive of Atari SA, said the company’s decision to seek bankruptcy protection was the best option to protect the company and its shareholders, and said that Atari would seek to maximise proceeds.