Gaming legend Atari Inc., which filed for Chapter 11 in January, may have found an extra life, as the a bankruptcy court has confirmed the company’s debt-restructuring plan is sufficient to seek the approval of its creditors. The documents were filed on Oct. 29 and the hearing for the organization’s plan is scheduled for Dec. 5.
“The plan effectuates a restructuring transaction under which the sponsor will make contributions to the estates sufficient to ensure a meaningful recovery to holders of general unsecured claims,” Atari said in court filings. Those unsecured claims holders are expected to recover up to 25 percent of their money in a three-step payment plan.
Under the plan, unsecured creditors, who are estimated to be owed between $5 million and $7 million, will receive 8 percent of their claims when the plan kicks off. They would receive another 8 percent payment a year from that date, and a third payment for 9 percent, two years from the plan's kickoff..
Atari Inc. filed for Chapter 11 in part to break away from its France-based parent company Atari SA, which had been unprofitable for over a decade and has since gone through similar steps to restructure debts in French courts. In the lead up to the bankruptcy filings, Atari Inc. attempted to sell off a number of its intellectual properties, generating around $5.1 million in doing so. The sales were not enough to save it from the bankruptcy filing.
Properties still owned by Atari include Roller Coaster Tycoon and Test Drive, which, among other products, Atari has valued at over $22 million. Atari earned fame by being one of the first to bring electronic entertainment into the home with consoles like the Atari 2600.
Atari’s debt restructuring comes on the eve of a new console generation, as both Microsoft and Sony prepare to release their latest entertainment systems in the coming months. If Atari is able to avail itself of debt, it could potentially capitalize on these new platforms by developing games with the IP it still holds.
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