Overview

It was all the craze in the early 70s to mid-80s with the first ever gaming condole and classic titles like “Pong,” “Centipede” and “Asteroid”. In 2000, Infogrames Entertainment of France purchased a small stake in the company and later bought out the full company, changing the name to Atari S.A. The $11 million deal between Infogrames and Atari was positive for Infogrames and its shareholders (Malware, 2014). Infogrames’ CEO David Gardner stated the merger would create a simplified global structure for the business during the rebuilding phase of the company (Future Publishing Limited, 2014). In addition to the merger, Infogrames agreed to lend the gaming company $20 million for operational cash requirements between the initiation of the deal and its close (Malware, 2014). Essentially, this merger combined Atari US with Atari AS and operated under the latter. As technology continued to advance, new gaming and entertainment consoles became ever more popular and Atari loss previous momentum and slowly dwindled away.
Filing Bankruptcy
Atari US filed Chapter 11 bankruptcy protection January 2013 to break away from its unprofitable parent company to “secure independent capital for future growth, primarily in the areas of digital and mobile games” (Pepitone, 2013). Under Chapter 11 bankruptcy, the debtor proposes a reorganization plan to pay creditors back over time (Liuzzo, p343). Atari US expects this filing will give them the boost they need to continue its focus on digital game development and licensing. At the time of the filing, Atari US had $1 to $10 million in estimated assets, and debt between $10 and $50 million (McCoy, 2013). To aid in their restructure, Atari US was approved for $5milliom in debtor-in-possession financing from Tenor Capital (Pepitone, 2013).

Advantages and Disadvantages Most would have a negative view of bankruptcy, but in this case Atari’s bankruptcy allows the company to restructure and separate from its parent company, Infogrames. According to Bloomberg, this is the best option for the gaming company, considering its parent company had been unprofitable since 1999 (Wong & Harris, 2013). Too this bankruptcy will permit Atari US the opportunity to increase review not previously realized, continue operations, and potential financing of roughly $5.25 million in debtor-in-possession. In the restructure, the company has shifted focus from the traditional model to the more attractive, digital games, licensing, and developing mobile games (Huffington Post, 2013). On the downside, the company’s shares fell as low as 5.6 percent and so has its market shares from over 50 million euros to just a little more than half. In this bankruptcy restructure, Atari US will lose some of its classic franchises like Pong, Centipede, Missile Command and Asteroids and the Atari logo (Tassi, 2013). The loss of the name permitted Infogrames full control of the Atari name. Finally the company was required to sell of its assets within 120 days (Kuba, 2013).

References
Future Publishing Limited (2014). Infogrames, Atari Merge in $11 million Deal. Retrieved from http://www.edge-online.com/news/infogrames-atari-merge-11-mln-deal/
Kubba, S. (2013). Atari US files for bankruptcy, selling logo and assets. Retrieved from http://www.forbes.com/sites/insertcoin/2013/01/21/atari-us-files-for-bankruptcy-sells-assets-logo/ Malware (2014). Infogrames Acquires Atari for $11 million. Retrieved from http://www.techpowerup.com/59180/infogrames-acquires-atari-for-11-million.html McCoy, K. (2013). Atari U.S. Unit Files Chapter 11 Bankruptcy. Retrieved from http://www.usatoday.com/story/tech/gaming/2013/01/21/atari-chapter-11-bankruptcy/1850939/
Pepitone, J. (2013). Atari U.S. Files for Bankruptcy but Plays On. Retrieved from http://money.cnn.com/2013/01/21/technology/atari-bankrupt/index.html
Tassi, P. (2013). Atari US Files for Bankruptcy, Sells Assets, Logo. Retrieved from http://www.forbes.com/sites/insertcoin/2013/01/21/atari-us-files-for-bankruptcy-sells-assets-logo/ Wong, D. & Harris, A. (2013). Atari’s US Operations File for Chapter 11 Bankruptcy.
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