Atari has indeed filed for Chapter 11 bankruptcy, but its reasons for doing so aren't as dire as they seem. Atari Inc. and three of its affiliates filed for Chapter 11 reorganization as a method to break the American-based business away from its French parent, Atari S.A. They also hope to find a buyer in the next few months to make the company private. According to the LA Times, their plan is to grow a "modest business focused on digital and mobile platforms."
Atari itself has been steeped in financial troubles for several decades. Atari in the US has slowly been improving over the last few years, mostly thinaks to developing an Atari "greatest hits" compliation for smart phones and the web. The French parent has also been steadily improving over the last couple years, but hasn't been largely profitable due to its subsidiary, Eden Games, which has been up for sale and continually loses money.
What has really killed Atari's profitability is its practically complete reliance upon a London financial company, BlueBay Asset Management, for liquid assets. On December 31st, a $28-million credit with BlueBay lapsed, which halted Atari's work on releasing games currently in progress.
As part of Atari Inc's reorganization plan, it has secured a commitement for $5.25 million in debtor-in-possession financing in order to continue operations and release these games. As soon as the Chapter 11 is complete, and assuming it is successful, Atari Inc. could walk away with little to no debt owed to BlueBay. As a result, Atari's businesses in France would either hunt down a buyer or dissolve altogether.