Atari U.S. Operations File for Chapter 11 Bankruptcy

Atari SA’s U.S.-based video-game- making businesses have filed for bankruptcy protection inManhattan with the intention of separating from the unprofitable French parent and seeking independent funding.

New York-based Atari Inc., maker of video games “Pong” and “Asteroids,” as well as affiliates Atari Interactive Inc., Humongous Inc. and California U.S. Holdings Inc., asked to be jointly administered in filings today in U.S. Bankruptcy Court, according to a statement.

The move to separate the U.S. business comes after the parent company Atari said in December it was strained for cash. The French parent, which hasn’t made a profit since 1999 despite asset sales and restructuring, forecast a “significant loss” in 2012-2013, and said it would weigh all means of raising cash and had been talking to potential investors.

“The Chapter 11 process constitutes the most strategic option for Atari’s U.S. operations, as they look to preserve their inherent value and unlock revenue potential unrealized while under the control of Atari SA (ATA),” according to today’s statement. “During this period, the company expects to conduct its normal business operations.”

Atari shares fell as much as 5.6 percent to 84 centimes in Paris trading. The stock was down 3.4 percent at 86 centimes as of 9:59 a.m., giving the company a market value of 25.4 million euros ($33.8 million), and bringing the drop to 50 percent over the past year.

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