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Atari US files for bankruptcy, selling iconic logo and assets

Sinan Kubba
Updated ·4 min read
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Atari US files for bankruptcy, looks to separate from French holding company

Atari Inc. filed for chapter 11 (restructuring) bankruptcy this morning, as it aimed to detach itself from Atari SA, its French parent company, and acquire independent business. Atari Inc. said it plans to sell all of its assets in the next 90 to 120 days, including defining franchises such as Pong and Asteroids, and even its iconic logo. The company has already secured, pending approval, $5.25 million in debtor-in-possession investment from funds managed by investment advisory Tenor Capital Management.

While Atari boasts a 40 year history, and is tied closely to the pioneering years of the arcade, its name has meant a number of different things across that time thanks to several changes of hands.

The US-based company now called Atari. Inc was GT Interactive when it was founded in 1993. GT Interactive then became Infogrames Inc. in 1999 after French company Infogrames Entertainment acquired controlling interest in it. In 2001, Infogrames Entertainment bought Hasbro Interactive, who had acquired Atari Corporation and its Atari properties three years prior. In 2003, Infogrames Inc. became Atari Inc, now with license to use the Atari name and logo, and in 2008 Infogrames Entertainment completely acquired the company. Then, just to confuse everything that one step further, Infogrames Entertainment renamed itself as Atari, SA in 2009.

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NEW YORK, Jan. 21, 2013 /PRNewswire/ -- Today Atari Inc., Atari Interactive Inc., Humongous, Inc. and California US Holdings, Inc. (collectively, the "Companies") filed petitions for relief under chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. 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.
Within the next 90-120 days, the Companies expect to effectuate a sale of all, or substantially all, of their assets in a "sale free and clear" under section 363 of the Bankruptcy Code or to confirm plans of reorganization that accomplish substantially the same result. These assets include not only one of the most widely recognized brand logos, which is familiar to 90% of Americans, according to a recent survey, but also legendary game titles including Pong®, Asteroids®, Centipede®, Missile Command®, Battlezone® and Tempest®. Other recognized brands include Test Drive®, Backyard Sports® and Humongous®.
Under current management, Atari Inc. has shifted its business from traditional retail games to digital games and licensing with an increased focus on developing mobile games based on some of Atari's most iconic and enduring franchises. With these moves, the company has added new revenue models, including digital download and advertising. As a result, Atari Inc. has become a growth engine for Atari S.A., which in turn has reported consecutive annual profits in 2011 and 2012.
The company has recently launched a slew of chart-topping titles for iOS and Android mobile platforms, including Atari® Greatest Hits, Outlaw™, Breakout® and Asteroids Gunner®. The company has previously announced upcoming mobile and tablet games based upon the popular Rollercoaster Tycoon® franchise and Atari® Casino.
The Chapter 11 process constitutes the most strategic option for Atari's U.S. operations, as they look to preserve their inherent value and unlock revenue potential unrealized while under the control of Atari S.A. During this period, the company expects to conduct its normal business operations.
The U.S. companies are also seeking approval to obtain $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. Each unit has filed a number of traditional "first-day" pleadings, which are intended to minimize any disruption of their day-to-day operations.
Peter S. Partee, Sr. and Michael P. Richman of Hunton & Williams LLP are proposed to serve as lead counsel for the U.S. companies in their respective Chapter 11 cases.
About Atari
Atari (www.atari.com) is a multi-platform, global interactive entertainment and licensing company. Atari owns and/or manages a portfolio of more than 200 games and franchises, including world renowned brands like Asteroids®, Centipede®, Missile Command®, Pong®, Test Drive®, Backyard Sports®, and Rollercoaster Tycoon®. Atari capitalizes on these powerful properties by delivering compelling games online (i.e. browser and digital download), on smartphones and tablets and other connected devices. The Company also develops and distributes interactive entertainment for video game consoles from Microsoft, Nintendo and Sony. As a licensor, Atari extends its brand and franchises into other media, merchandising and publishing categories.

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