Atari Files Chapter 11 Bankruptcy

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by Associated Press

Story Created: Jan 21, 2013 at 8:48 PM EDT

Story Updated: Jan 21, 2013 at 8:53 PM EDT

NEW YORK -- Video game maker Atari's U.S. operations have filed for Chapter 11 bankruptcy protection in an effort to separate from their French parent company, which is filing a similar motion separately in France.

In a statement, Atari says the move is necessary to secure investments it needs to grow in mobile and downloadable video games.

Atari's U.S. operations have shifted to focus on digital games and licensing, including developing mobile games which have become a growth engine for its owner.

France's Infogrames Entertainment first took a stake in Atari in 2000. It acquired the remaining stake in 2008 and changed its name to Atari S.A.  But the U.S. operations have been better performing than the rest of the company.

CEO Jim Wilson said the moves were the "best decision to protect the company and its shareholders." The auction process in U.S. bankruptcy proceedings will "maximize the proceeds" going to shareholders, he added.

Atari, which turned 40 last year, was a videogame pioneer with games like "Pong" and "Centipede," but has changed ownership several times amid financial problems. In its filing with the U.S. Bankruptcy Court in the Southern District of New York, Atari said it had $1 million to $10 million in assets and $10 million to $50 million in debt. It is seeking approval for $5.25 million in debtor-in-possession financing from investment firm Tenor Capital Management.

Atari said it expects to sell its assets or confirm a restructuring plan within the next three to six months.

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