Atari's bankruptcy escape plan is court-approved
It's been less than a year since Atari filed for Chapter 11 bankruptcy
, and today the Wall Street Journal
reports the company has secured approval from both its creditors and the court for a plan to pay back part of its debt and exit bankruptcy.
If successful, the U.S.-based Atari Inc. (formerly GT Interactive) appears poised to act on its previously-stated intent to separate from French parent company Atari S.A. -- formerly known as Infogrames -- and establish itself as a purveyor of fine digital-only games.
Atari's comeback plan, approved by Judge James Peck in the U.S. Bankruptcy Court of Manhattan, requires the company to pay back a $3.8 million bankruptcy loan from Alden Global Capital. Atari also promises to pay its unsecured creditors "up to $560,000" when it exits bankruptcy, plus a matching amount the year after and then an extra $630,000 the year after that, for a total of roughly $1.75 million. That doesn't sound like a bad deal, especially in light of the fact that Atari's unsecured creditors are reportedly owed $10.3 million.
Atari is expected to pay the debts from a $3.4 million cash reserve, along with an extra $1.75 million the company will receive when it formally exits bankruptcy. Atari successfully sold off
a number of its properties at auction this summer -- including Total Annihilation
, Star Control
and Master of Orion
-- so it seems likely that the company is relying on that income to pay back its debts.
The loss of those much-loved franchises is likely to hamper Atari's efforts to become a major player in the digital games space, though it still has properties like Test Drive
, RollerCoaster Tycoon
and Fatty Bear's Birthday Surprise
to fall back on.
This news story has been updated to clarify that the current incarnation of Atari, Inc. was formerly known as GT Interactive, and is not in fact the original Atari.