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Atari's bankruptcy escape plan is court-approved
Atari's bankruptcy escape plan is court-approved
December 5, 2013 | By Alex Wawro

December 5, 2013 | By Alex Wawro
More: Console/PC, Business/Marketing

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.

Editor's Note: 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.

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Martin Goldberg
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Escape what clutches? First, this Atari Inc. is simply the former GT Interactive renamed to Atari Inc. It has literally nothing to do with the original Atari Inc. Second, it doesn't own the Atari name or properties, Atari SA does (and they're all held in it's self-created Atari Interactive holding company). It's never owned them in fact. Last, Jim Wilson was head of both Atari SA and Atari Inc. when the bankruptcy hit and the ridiculous announcement about "breaking away" from Atari SA was made. It was a shell game. There were literally a combined five to 10 people across Atari Inc. and Atari Interactive, all operations had been moved over to Atari SA years ago. And now that Atari SA is gutted the same way the past year (and the Los Angeles office shut down), it's literally all the same people running all three "companies."

Alex Wawro
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Hey Martin, thanks for adding to the discussion. I updated our story to clarify the current state of the Atari brand and the source of that "breaking away" comment, which I hope allays some of your concerns.

Steve Fulton
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You go Marty!

R. Hunter Gough
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I like how you nonchalantly slipped Fatty Bear's Birthday Surprise in there.