A day after Atari Inc filed for Chapter 11 protection in the USA, citing efforts to split from its unprofitable French parent company, today said French parent filed for similar protection against creditors in the French Courts. Both Atari SA and Atari Europe SAS have filed for Book 6 protection.
In a bizarre twist, a new press statement was issued today stating that both Atari Inc and its French parent are coordinating efforts to protect the company.
Atari’s dire financial position has now been revealed. Atari’s board met last month to discuss options as a deadline for a previous restructuring arrangement with BlueBay loomed. BlueBay agreed to extend the term for their $21 million debt until March 31st 2013 but warned they could not offer any further funding or assistance, and were continuing their efforts to offload their stake in the company.
For their part, Atari management continued in vain with their own efforts to secure funding and a potential buyer. Without funding, the cash-strapped company revealed it would be announcing an operating loss for the second half of 2012, and would end the year with significant losses.
As Atari Inc filed for bankruptcy it sought permission from the courts to release funds to cover unpaid wages. The situation is desperate, and with debts of up to $50 million USD owed to over 200 creditors you could say the writing is well and truly on the wall. As for assets, the company has stated a value between $1 to $10 million USD.
Without significant investment the company is doomed, and investors haven’t exactly been queuing up to help out. Everything is for sale, even the rights to the Fuji logo. Given the debt mountain the company faces it may be doubtful that someone will move now to save the company or buy its assets. The vultures are gathering and many will probably wait for Atari to fail so they can pick at its bones for a knockdown price.
As Atari Inc seems to be heading helplessly toward the wall, we’re reminded that the company of today holds almost no resemblance to the Atari Inc of old. There will be no love lost, no flowers sent from long-time fans of the brand and retro gaming and computing enthusiasts.
Many will hope that Atari joins hundreds of other once great consumer brands in corporate heaven. At least then the retro community will be able to do what they do best, without fear of persecution from a company that failed to make a profit but yet excelled at alienating its most die-hard of fans.
This sorry saga is not over yet. We should remember that today’s news impacts on Atari employees and their families. There are real people behind the headlines. We should also take some comfort in the fact that, whatever happens, the Atari brand will endure. It is now much more than any corporation that might hide behind it.