The decision to file bankruptcy can be a difficult one, but in financially challenging times, it may be a sound option. Filing Chapter 11 bankruptcy can help a struggling business reorganize debt in an effort to keep it from going under. Businesses facing this difficult choice should get an understanding of debt reorganization and how bankruptcy laws can benefit a business.
The U.S. arm of a video game company has filed for bankruptcy. Atari filed Chapter 11 in U.S. Bankruptcy Court in New York on Jan. 20. The company is part of French-based Atari S.A.
Atari may be best known for video games Pong and Asteroids. The company is considered by many to be a pioneer in the video game industry, but that reputation has not translated into profits. Atari and its parent company have been saddled with debt problems for decades. Even though the French parent company made small profits during the past two fiscal years, the U.S. division is attempting to use the bankruptcy to separate from Atari S.A. If the parting of ways is successful, Atari management want to find a buyer and become a privately owned company focused on developing games for smartphones and the Web.
A business owner considering Chapter 11 bankruptcy should understand that it can be a complicated process. Commercial bankruptcy can involve the liquidation of debts or assets, secured and unsecured debt and other complex business bankruptcy issues. There may also be different tax implications so any business owner looking at bankruptcy as an option should find out as much as possible about the process.
Source: Newsday.com, “U.S. division of Atari files for bankruptcy,” Ben Fritz, Jan. 21, 2013