On Monday, French video game company Atari announced that its U.S. subsidiaries have filed for Chapter 11 bankruptcy protection in the U.S., while Atari SA and Atari Europe SAS seek similar protection in procedures held before French courts.

Explaining the drastic move, Atari noted that its main shareholder and sole lender, BlueBay, has been unable to find a buyer for its stake in Atari and cannot continue to support the company itself because the two funds it set up to own stakes in Atari -- BlueBay Value Recovery (Master) Fund Limited and BlueBay Multi-Strategy (Master) Fund Limited -- are currently undergoing liquidation themselves.

Atari, the company said in a statement, is currently profitable on an operating basis and has been paying down its debt, yet remains "starved for funds," "unable to finance its continued growth," and unable to repay its credit facility to BlueBay, which comes due on March 31.

In the U.S., Atari expects its subsidiaries to sell or restructure their assets via bankruptcy proceedings over the next 90 to 120 days. Distressed debt lender Tenor Capital has agreed to provide $5 million in debtor-in-possession financing to keep the company running through bankruptcy. 

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