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Monday, January 21, 2013

Atari files for bankruptcy protection

Posted: 21 Jan 2013 01:42 AM PST

Atari said tonight it has filed for bankruptcy protection as part of a move to separate from its French parent company.

The filing suggests that even the most venerated brands aren’t guaranteed to live forever. Atari’s name stretches back to the dawn of the video game industry with Pong.

The move is an attempt to carve out a separate existence for the U.S. company. The filing includes companies operating under the names Atari Inc., Atari Interactive Inc., Humongous, Inc. and California US Holdings, Inc. The papers were filed in U.S. Bankruptcy Court in New York. The company expects to continue operations during the bankruptcy proceedings.

“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,” the company said in a  press release.

Within the next three to four months, Atari expects to sell all of its assets in a ”sale free and clear” under section 363 of the Bankruptcy Code. The assets include the Atari brand logo, which is familiar to 90 percent of Americans, but also the legendary game titles including Pong, Asteroids, Centipede, Missile Command, Battlezone and Tempest. Other recognized brands include Test Drive, Backyard Sports and Humongous.

Atari has shifted from retail games to digital games and licensing. It has focused on developing mobile games based on some of Atari’s franchises. Altogether, Atari has more than 200 game properties. Atari says it is producing profits for its French parent, Atari S.A.

Atari’s newest mobile games include Atari Greatest Hits, Outlaw, Breakout and Asteroids Gunner.

The U.S. entities want the court to approve $5.25 million in debtor-in-possession financing from one or more funds managed by Tenor Capital Management, a firm specializing in convertible arbitrage and special situations.

Peter S. Partee, Sr. and Michael P. Richman of Hunton & Williams LLP are proposed to serve as lead counsel in the bankruptcy filing.

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