Judge thanks parties for their handling of 'difficult case'
A US judge has approved Atari's plan to leave bankruptcy protection a little less than a year after filing for Chapter 11 in January.
The Wall Street Journal reports that Judge James Peck of the U.S. Bankruptcy Court in Manhattan not only signed off on the deal Thursday, but actually thanked the involved parties for their handling of the “difficult case”.
The plan is centered around a $3.4 million cash infusion from parent company Atari S.A. deemed necessary when many of Atari Inc's assets failed to sell at auction.
When Atari exits bankruptcy it will receive another $1.75 million from its parent.
The strategy received unanimous support from the company's creditors.
The first payout of $3.8 million will go to bankruptcy lender Alden Global Capital – the full amount owed – with an additional payment of $560,000 to the company's unsecured lenders when it exits bankruptcy, to be duplicated the next year, and $630,000 the year after.
In total, the company's unsecured creditors are owed $10.3 million, but voted to accept the terms.
When the judge said it was a difficult case, we was almost certainly referring to the failed auction of Atari's catalog of games.
At first the company planned to sell off its entire catalog to a single bidder, but when only 15 bids were placed out of 180 potential buyers approached – none of which were considered acceptable – the company decided to sell off its assets in lots.
Though some major franchises changed hands, its highest valued properties (Roller Coaster Tycoon and Test Drive) didn't draw bids.
Interestingly, bidding for those two franchises started at $3.5 and $1.5 million respectively – so the cash from Atari S.A. seems to have been a replacement for the expected income.