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Atari files for Chapter 11 bankruptcy to split from French parent company

By Daniel S Levine,

While Atari’s classic video games may still be popular decades after they were created, the company itself is hurting. The U.S. unit of the company behind Pong, Asteroids and other classics, filed for Chapter 11 bankruptcy in the hopes to split from its French parent company.

According to The Associated Press, the company says that the movie is necessary if it hopes to continue to branch out into the mobile game market. The U.S. unit has focused its energies on creating games for smartphones and tablets and licensing out the classic Atari brands.

Businessweek reports that Atari’s affiliates - Atari Interactive Inc., Humongous Inc. and California U.S. Holdings Inc. - also joined in the motion.

“Within the next 90 to 120 days, the companies expect to effectuate a sale of all, or substantially all, of their assets,” they said in a statement. They also have reorganization plans that could “accomplish substantially the same result” under bankruptcy laws.

The French company Infogrames Entertainment, which has made a similar filing in France, has had a major stake in Atari since 2000. But recently, Atari U.S. has far outperformed the rest of the company. Still, Atari said that a credit arrangement with major investor BlueBay would end at the end of this year, so it needs to be able to find other ways to raise funds.

CEO Jim Wilson called it the “best decision to protect the company and its shareholders.”

Atari began in 1972, but is no longer a leading video game company, falling behind Activision, Electronic Arts and others. Still, its classic games remain popular as they are now available on various formats.

 
 

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