In US, France, Atari files for bankruptcy

NEW YORK — Video game maker Atari’s US 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 said the move is necessary to secure investments it needs to grow in mobile and downloadable video games.

Atari’s US operations have shifted to focus on digital games and licensing, including developing mobile games, and 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 SA.


But the US operations have been better performing than the rest of the company. In fiscal 2012 digital and licensing revenue grew significantly and contributed 70 percent of revenue, while sales in bricks-and-mortar stores declined.

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In December, Atari SA said a credit agreement it entered into with investor BlueBay — its main shareholder and only lender — would lapse at the end of the year and the company was seeking other ways to raise money. It added that it expects to report a ‘‘significant loss’’ for fiscal 2012.

On Monday, Atari SA said it and its European operations would file related bankruptcy procedures in France at the same time as the US bankruptcy filing.

Chief executive Jim Wilson said the moves were the ‘‘best decision to protect the company and its shareholders.’’ The auction process in US bankruptcy proceedings will ‘‘maximize the proceeds’’ going to shareholders, he added.

Creditors include accounting firm Deloitte & Touche, and retail stores Kmart and Walmart, although none are owed more than $250,000. BlueBay is not listed as one of the US operations’ creditors.


Atari, which turned 40 last year, was a video game pioneer with games like Pong and Centipede, but has changed ownership several times amid financial problems.

In its filing with the US 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.