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Legendary video game company files for Chapter 11 bankruptcy

Most of our Escondido readers have probably heard of the video game company Atari. The company first became well-known back in the 1980's, producing such early gaming hits as Pitfall and Pong. However, as some of the more well-funded game consoles, such as Sega, Playstation and Xbox, began to be released in the 1990's, Atari could not quite keep up. The brand endured though, and continued to be involved in video game development. But, it looks like Atari has run into more hard times, as the company recently filed for Chapter 11 bankruptcy protection.

However, according to the reports, the Chapter 11 filing may only be a temporary business strategy. Atari is currently owned by a foreign parent-company, and the Chapter 11 process appears to be a move toward establishing a more independent company. The intention is apparently to sell Atari's operations in the United States as a whole unit - or as close to a whole unit as possible.

For many companies going through the Chapter 11 bankruptcy process, funding is secured in order to maintain operations while the bankruptcy unfolds. Staying in operation - and attempting to turn a profit - can allow a company to retain most or all of their employees. According to the recent reports on Atari's bankruptcy, the company has approximately 40 employees in the United States.

Selling the business and all of its assets is another option in Chapter 11. Sometimes the best hope for a company to remain in existence is for another owner to take over. That can lead to fresh ideas and perspectives, as well as infusing extra capital.

For any company's decision makers who are considered a Chapter 11 bankruptcy filing, ensuring that all of the options are known before a decision is made can make a drastic difference in the survival of the business.

Source:, "Game over: Atari files for bankruptcy," Jan. 21, 2013

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