So in general what happens after all assets of a bankrupt corporation are put up for auction and only a few are sold. Is that it for the shareholders? Does the corporation continue to own the rights to assets no one else wants to buy?
So in general what happens after all assets of a bankrupt corporation are put up for auction and only a few are sold. Is that it for the shareholders? Does the corporation continue to own the rights to assets no one else wants to buy?
Seniority of payout: Outstanding salary to employees -> Senior debt -> Junior debt -> Preferred stock -> Common stock
Shareholders are actually lowest in the chain. If Atari owes a lot of money, shareholders get... zero.
Essentially, yes. Usually, IP is the first to go (it's generally the most valuable). Then physical stuff, all the way down to office chairs and staplers (I'm not kidding). They raise as much money as possible (under the court's supervision), and it goes to pay off a list of debts (as MaiNoKen said, salaries are first, then debts to banks, and finally, stockholders). Once they're out of money, that's the game.
That's a huge oversimplification, but generally it's how these things work.
For quick reference, here's what sold and what didn't at auction. Other IPs were either deemed not valuable enough, already had other owners lined up, or some extraneous circumstance. For the items deemed not valuable enough to be auctioned they will likely be offered up for sale without a price set by the court.
-RollerCoaster Tycoon -Test Drive -Humongous et al. *SOLD* -Backyard Sports *SOLD* -Total Annihilation *SOLD* -Airborne Ranger -Battlezone *SOLD* -Master of Orion *SOLD* -Moonbase Commander *SOLD* -Star Control *SOLD* -Atari Classics et al.
4 of these we can assume were sold at minimum bid (no back up bidder was listed, therefor there was no bid past the first). The other three had at least two bids, but until further notice we don't know how high those prices went.
Personally I can't believe Atari Classics didn't sell.
So we got to keep waiting for new information I guess.
Essentially, yes. It wasn't up for auction in the court ordered auction, but they asked permission to sell off other assets on the side at their own prices, so they may or may not be in negotiations for BG and/or any other part of the D&D franchise right now.
Perhaps someone who has a relationship with a gaming journalist can convince them to pursue the story... using their journalistic wiles to ferret out the fate of unsold artari IP.
I'll make the same comment here I've been making in other places.
I'll preface this with the comment "I'm not a lawyer. I know little to nothing about actual bankruptcy law."
I don't believe Atari has the rights to sell ANYTHING related to the IP of BG. Yes, they have distribution rights for BG, but you can't sell distribution rights. Other than that, I think Atari's declaration of financials clearly shows that they don't own a damn thing related to the IP of BG. They hold the source for BG and other D&D based games for Hasbro, but they don't own any of it.
When a company goes into bankruptcy it has to sell off EVERYTHING it owns. The courts are so strict on this that they are even forced to declare all back payments for a certain period of time so that the courts can go back and REVERSE THOSE PAYMENTS if needed to properly pay off the company's debts.
If Atari owned ANYTHING related to the IP of BG, it would have been in the court documents somewhere...and it would be up for sale. Whether declared as part of Atari directly or listed in some kind of subsidiary sale.
The only thing Atari owns of the game are distribution rights, and Atari can't sell those. Imagine you being a writer. Imagine you have 1K copies of your book. Imagine you let your best friend sell your book for you and take a cut of your profits. Your friend doesn't have the right to hand 500 copies to HIS friend and have them sell the book. Nor can his friend pay your friend $20 to get 500 copies to sell.
The only folks with any ownership in the BG Series at this point is Hasbro. They're running the show, they're calling the shots. I would assume that since Atari is filing chapter 11 (RESTRUCTURING) and not chapter 7 (Liquidation), Hasbro can't cancel it's distribution contracts with Atari...Atari will still exist as a company after the chapter 11 filing ends...who owns it may change, but the COMPANY still exists...
There's no BG IP to buy because there's no BG IP for sale.
I'd further guess (though I could be COMPLETELY wrong here) that there is absolutely nothing preventing Trent and Co. from continuing to work on BGII or the patch to BG or even BGIII or anything else of that nature...I suspect their DEVELOPMENT contract is with Hasbro.
The problem is Beamdog/Overhaul has no legal way to DISTRIBUTE what they produce and thus no way to get PAID for their work.
Let me throw this at the wall and see if this sticks.
The IP Owner is Hasbro. Hasbro allows BeamDog to re-write BG into BG:EE with restrictions. Great the software is re-written, but where does BeamDog go to get their game into the hands of customers? They don't have distribution rights. So they turn to Atari, who DOES have distribution rights for the game. They provide the software to Atari who can then legally setup a distribution system for the game. (I would suspect this is where the requirement for DRM came from...)
The money we pay for the game would go first to the distributor (Atari) and from there a cut would come down to BeamDog (as well as Hasbro and potentially others as well). That cut cannot make it to BeamDog because Atari can't pay anyone anything with it being in bankruptcy.
So why can Steam continue to sell the software? Either BeamDog's money isn't coming through Atari at that point (does steam have distribution rights?), or BeamDog doesn't get a cut of sales through steam (which I can't imagine but who knows?). That's the only way I can see for BeamDog to have to take down their sales method while another method stays up.
Also note, GoG has not pulled the original BG/BGII/etc. from sale on it's site...this is further proof that the IP is not for sale/in jeopardy...all existing agreements for the distribution of the existing game are unaffected by the Atari bankruptcy.
There's a piece of the puzzle here missing and it has to do with the Steam model and why steam has been allowed to continue sales of BG:EE.
@Illydth Actually I think you've misunderstood a bit.
Firstly, for smaller assets like the Baldur's Gate IP they will be forced to sell, but they aren't forced to sell at a court declared price like the bigger stuff. That's why you haven't seen it on the sale listings, along with many other less-valuable assets.
Distribution rights actually can be negotiated for and unless Hasbro has a claim that they automatically get the distribution rights if something happens to Atari, then they can indeed be sold, bargained with, and won or lost. I know this from publishing as you see it commonly with books, actually.
Also, WotC still owns 'part' of BG as well. As owners of the D&D franchise (even without the electronic distribution rights) Overhaul still had to deal with them as well as Atari and Hasbro (this can be found well documented on the site) so it's not as simple as "everything belongs to Hasbro now."
Also, I believe if Atari fails to pay back enough they will still be liquidated. I'm a bit fuzzy on all of the complex bits of the laws on that, but it seems their auction didn't go well so we'll be seeing on that.
Steam doesn't have distribution rights except by permission from Atari- they don't own anything, they've just been contracted.
Beamdog does indeed get a cut from Steam, although I hear it is pretty small. If rumors of Beamdog owing Atari are true then Atari may not be giving them their cut right now. This could potentially be why Trent and co. aren't working on it (the only sales they'd be getting they wouldn't be getting a cut from).
GoG hasn't pulled the game from sale because they don't have the same kind of contract that Overhaul does. Being a developer and a retailer are *very* different in terms of contracts. It is likely that Overhaul hasn't stopped work because they *have* to, but rather because they won't be getting paid for it and they want to see how things work out before wasting their time (potentially). GoG isn't wasting their time, they're still getting their share of the cut.
And look down at question 14, Page 5, we get "Properties held for another Person".
In which is listed:
NAME AND ADDRESS OF OWNER DESCRIPTION AND VALUE OF PROPERTY LOCATION OF PROPERTY Hasbro 1027 Newport Avenue Pawtucket, RI 02861 Value Unknown Source Code - Various Game Titles Server at Main Office 475 Park Avenue South New York, NY 10016
Now, unless I read this wrong, this is a clear identification that Atari does NOT in fact own anything related to the IP of BG. They are holding the IP for Hasbro but do not own it. This section of the description of assets I assume is in the document to identify those properties which cannot be taken and sold from the company in Bankruptcy...I assume it's there to identify to the court what is not legally owned even if it looks to be.
I defer to your knowledge on Distribution Rights being entities that can be sold or bargained with...though that tends to muddy the issue of why BG:EE was pulled from sale at BeamDog.
As to Chapter 11 and whether Atari exists as a company or not, I'll point you at the Wikipedia entry on Chapter 11 Bankruptcy:
Under "Features of Chapter 11 Reorganization" ------------------ Quote:
If the business's debts exceed its assets, the bankruptcy restructuring may result in the company's owners being left with nothing; instead, the owners' rights and interests are ended and the company's creditors are left with ownership of the newly reorganized company. ------------------
This again notes that Atari, as a corporation continues to exist regardless of the outcome of the bankruptcy...it's who owns that company at the end of the day that is up for grabs. Either the current corporation owners will continue to own it (if they can raise enough money from sales to pay off their debts) or the creditors as a group will own it if they cannot.
Also, WotC still owns 'part' of BG as well. As owners of the D&D franchise (even without the electronic distribution rights) Overhaul still had to deal with them as well as Atari and Hasbro (this can be found well documented on the site) so it's not as simple as "everything belongs to Hasbro now."
Sounds to me from the latest insightful speculation (which is still merely speculation), that Hasbro is the ultimate player in this drama. "Ultimate" as in
Then there's me, somewhat excited that Master of Orion was sold... I actually didn't realize Atari had that one (MicroProse sort of vanished into the aether), and I realize how awful MOO 3 was. Still... If I can't have more BG...
Sorry for the spoiler. Since it was general, I guess I wasn't thinking about that. I'll have to get into the habit of using the spoiler tags more frequently, since the forum seems to be growing into a consensus that good manners requires them.
Honestly, I would think the brand "Baldurs Gate" to be worth much more then 75.000. But then again, Bioware decied to make their own Dragon AGe, and Bethseda has picked up Fallout and use their own Elder Scroll... so maybe they cant sell it for much more.
This is due to how abusive and difficult atari and WOTC are with their partners/licensors. For example, Hex Coda was an awesome magitech cyberpunk premium module for NWN, it has been approved by WOTC. 3 weeks before release WOTC looked at the near final beta and nixed it, saying they felt it did not fit the fantasy "theme" of their settings and will dilute their IP. Main developer ended up releasing it as a free module (which you really must play). This spiraled further with several other premium modules being canceled near completion in a fairly arbitrary manner (IIRC atari was also on that too, wanting to shut down NWN1 sales to switch people over to NWN2)
That sorry mess got some people high up in Bioware to openly state how bad it is to make a game with IP owned by WOTC and Atari and to swear to never to do so again, using only original IP that they fully own and control. The result of that Bioware commissioning writers to create new IP Bioware personally owned... and that resulted in Dragon Age 1 and Mass Effect 1 both of which are awesomeness! Then they got bought out by EA and both franchises were ruined. Sad.
Also there is the issues with Atari going bankrupt, Hasbaro/WOTC ownership issues, and their legal battle over D&D license of which several game makers have become collateral damage. Any sane investor will not get involved in that toxic mess that is the D&D license.
While Hasbro generally has a reasonable reputation as a business, some folks in the gaming and tech industry are indeed quite "nazi" about their IP.
One of the problems with third party add-ons, remakes, and apps are: they don't make a lot of money - aka Hasbro will get some royalty. While such products are usually go trouble free, but they are not immune to Murphy's Law - you don't know if some add-on or revised content will trigger sh*t storms with social conservatives (on suggestive sex, religious, and racial content) or patent trolls (like some function of BG release on mobile device may have violated an obscured patent). If there are any hints of triggering trouble, the sane response is to shoot the concept down.
This is one of the reason why Apple, Sony and Nintendo, all of them own their own online store. Many WOTG products are authentic WOTG products. Keep in complete control, and be able to pull the plug quickly if there is a need to.
A debt claim of 261 million USD against a such a small company is crazy - that is equivalent to the market cap of a smaller publicly traded company with possibly a couple hundred employees. It is highly unlikely the liquidation of Atari US can generate anything close to that.
Comments
Outstanding salary to employees -> Senior debt -> Junior debt -> Preferred stock -> Common stock
Shareholders are actually lowest in the chain. If Atari owes a lot of money, shareholders get... zero.
That's a huge oversimplification, but generally it's how these things work.
-RollerCoaster Tycoon
-Test Drive
-Humongous et al. *SOLD*
-Backyard Sports *SOLD*
-Total Annihilation *SOLD*
-Airborne Ranger
-Battlezone *SOLD*
-Master of Orion *SOLD*
-Moonbase Commander *SOLD*
-Star Control *SOLD*
-Atari Classics et al.
4 of these we can assume were sold at minimum bid (no back up bidder was listed, therefor there was no bid past the first). The other three had at least two bids, but until further notice we don't know how high those prices went.
Personally I can't believe Atari Classics didn't sell.
I'll preface this with the comment "I'm not a lawyer. I know little to nothing about actual bankruptcy law."
I don't believe Atari has the rights to sell ANYTHING related to the IP of BG. Yes, they have distribution rights for BG, but you can't sell distribution rights. Other than that, I think Atari's declaration of financials clearly shows that they don't own a damn thing related to the IP of BG. They hold the source for BG and other D&D based games for Hasbro, but they don't own any of it.
When a company goes into bankruptcy it has to sell off EVERYTHING it owns. The courts are so strict on this that they are even forced to declare all back payments for a certain period of time so that the courts can go back and REVERSE THOSE PAYMENTS if needed to properly pay off the company's debts.
If Atari owned ANYTHING related to the IP of BG, it would have been in the court documents somewhere...and it would be up for sale. Whether declared as part of Atari directly or listed in some kind of subsidiary sale.
The only thing Atari owns of the game are distribution rights, and Atari can't sell those. Imagine you being a writer. Imagine you have 1K copies of your book. Imagine you let your best friend sell your book for you and take a cut of your profits. Your friend doesn't have the right to hand 500 copies to HIS friend and have them sell the book. Nor can his friend pay your friend $20 to get 500 copies to sell.
The only folks with any ownership in the BG Series at this point is Hasbro. They're running the show, they're calling the shots. I would assume that since Atari is filing chapter 11 (RESTRUCTURING) and not chapter 7 (Liquidation), Hasbro can't cancel it's distribution contracts with Atari...Atari will still exist as a company after the chapter 11 filing ends...who owns it may change, but the COMPANY still exists...
There's no BG IP to buy because there's no BG IP for sale.
I'd further guess (though I could be COMPLETELY wrong here) that there is absolutely nothing preventing Trent and Co. from continuing to work on BGII or the patch to BG or even BGIII or anything else of that nature...I suspect their DEVELOPMENT contract is with Hasbro.
The problem is Beamdog/Overhaul has no legal way to DISTRIBUTE what they produce and thus no way to get PAID for their work.
Let me throw this at the wall and see if this sticks.
The IP Owner is Hasbro. Hasbro allows BeamDog to re-write BG into BG:EE with restrictions. Great the software is re-written, but where does BeamDog go to get their game into the hands of customers? They don't have distribution rights. So they turn to Atari, who DOES have distribution rights for the game. They provide the software to Atari who can then legally setup a distribution system for the game. (I would suspect this is where the requirement for DRM came from...)
The money we pay for the game would go first to the distributor (Atari) and from there a cut would come down to BeamDog (as well as Hasbro and potentially others as well). That cut cannot make it to BeamDog because Atari can't pay anyone anything with it being in bankruptcy.
So why can Steam continue to sell the software? Either BeamDog's money isn't coming through Atari at that point (does steam have distribution rights?), or BeamDog doesn't get a cut of sales through steam (which I can't imagine but who knows?). That's the only way I can see for BeamDog to have to take down their sales method while another method stays up.
Also note, GoG has not pulled the original BG/BGII/etc. from sale on it's site...this is further proof that the IP is not for sale/in jeopardy...all existing agreements for the distribution of the existing game are unaffected by the Atari bankruptcy.
There's a piece of the puzzle here missing and it has to do with the Steam model and why steam has been allowed to continue sales of BG:EE.
Firstly, for smaller assets like the Baldur's Gate IP they will be forced to sell, but they aren't forced to sell at a court declared price like the bigger stuff. That's why you haven't seen it on the sale listings, along with many other less-valuable assets.
Distribution rights actually can be negotiated for and unless Hasbro has a claim that they automatically get the distribution rights if something happens to Atari, then they can indeed be sold, bargained with, and won or lost. I know this from publishing as you see it commonly with books, actually.
Also, WotC still owns 'part' of BG as well. As owners of the D&D franchise (even without the electronic distribution rights) Overhaul still had to deal with them as well as Atari and Hasbro (this can be found well documented on the site) so it's not as simple as "everything belongs to Hasbro now."
Also, I believe if Atari fails to pay back enough they will still be liquidated. I'm a bit fuzzy on all of the complex bits of the laws on that, but it seems their auction didn't go well so we'll be seeing on that.
Steam doesn't have distribution rights except by permission from Atari- they don't own anything, they've just been contracted.
Beamdog does indeed get a cut from Steam, although I hear it is pretty small. If rumors of Beamdog owing Atari are true then Atari may not be giving them their cut right now. This could potentially be why Trent and co. aren't working on it (the only sales they'd be getting they wouldn't be getting a cut from).
GoG hasn't pulled the game from sale because they don't have the same kind of contract that Overhaul does. Being a developer and a retailer are *very* different in terms of contracts. It is likely that Overhaul hasn't stopped work because they *have* to, but rather because they won't be getting paid for it and they want to see how things work out before wasting their time (potentially). GoG isn't wasting their time, they're still getting their share of the cut.
I'm going to send you back to the patch status post I made yesterday:
http://forum.baldursgate.com/discussion/19010/patch-status/p13
If you follow down to the description of assets Link: http://docs.bmcgroup.com/Atari/docs/316_D31599_Dkt116_SofaAtari,Inc.pdf
And look down at question 14, Page 5, we get "Properties held for another Person".
In which is listed:
NAME AND ADDRESS OF OWNER DESCRIPTION AND VALUE OF PROPERTY LOCATION OF PROPERTY
Hasbro
1027 Newport Avenue
Pawtucket, RI 02861
Value Unknown
Source Code - Various Game Titles
Server at Main Office
475 Park Avenue South
New York, NY 10016
Now, unless I read this wrong, this is a clear identification that Atari does NOT in fact own anything related to the IP of BG. They are holding the IP for Hasbro but do not own it. This section of the description of assets I assume is in the document to identify those properties which cannot be taken and sold from the company in Bankruptcy...I assume it's there to identify to the court what is not legally owned even if it looks to be.
I defer to your knowledge on Distribution Rights being entities that can be sold or bargained with...though that tends to muddy the issue of why BG:EE was pulled from sale at BeamDog.
As to Chapter 11 and whether Atari exists as a company or not, I'll point you at the Wikipedia entry on Chapter 11 Bankruptcy:
http://en.wikipedia.org/wiki/Chapter_11,_Title_11,_United_States_Code
Under "Features of Chapter 11 Reorganization"
------------------
Quote:
If the business's debts exceed its assets, the bankruptcy restructuring may result in the company's owners being left with nothing; instead, the owners' rights and interests are ended and the company's creditors are left with ownership of the newly reorganized company.
------------------
This again notes that Atari, as a corporation continues to exist regardless of the outcome of the bankruptcy...it's who owns that company at the end of the day that is up for grabs. Either the current corporation owners will continue to own it (if they can raise enough money from sales to pay off their debts) or the creditors as a group will own it if they cannot.
Speculation I guess.
--Illydth
Being awash in corporate profit seldom produces benevolence, eh?
Ouch. Big fat spoiler there.
For example, Hex Coda was an awesome magitech cyberpunk premium module for NWN, it has been approved by WOTC. 3 weeks before release WOTC looked at the near final beta and nixed it, saying they felt it did not fit the fantasy "theme" of their settings and will dilute their IP. Main developer ended up releasing it as a free module (which you really must play). This spiraled further with several other premium modules being canceled near completion in a fairly arbitrary manner (IIRC atari was also on that too, wanting to shut down NWN1 sales to switch people over to NWN2)
That sorry mess got some people high up in Bioware to openly state how bad it is to make a game with IP owned by WOTC and Atari and to swear to never to do so again, using only original IP that they fully own and control. The result of that Bioware commissioning writers to create new IP Bioware personally owned... and that resulted in Dragon Age 1 and Mass Effect 1 both of which are awesomeness! Then they got bought out by EA and both franchises were ruined. Sad.
Also there is the issues with Atari going bankrupt, Hasbaro/WOTC ownership issues, and their legal battle over D&D license of which several game makers have become collateral damage. Any sane investor will not get involved in that toxic mess that is the D&D license.
One of the problems with third party add-ons, remakes, and apps are: they don't make a lot of money - aka Hasbro will get some royalty. While such products are usually go trouble free, but they are not immune to Murphy's Law - you don't know if some add-on or revised content will trigger sh*t storms with social conservatives (on suggestive sex, religious, and racial content) or patent trolls (like some function of BG release on mobile device may have violated an obscured patent). If there are any hints of triggering trouble, the sane response is to shoot the concept down.
This is one of the reason why Apple, Sony and Nintendo, all of them own their own online store. Many WOTG products are authentic WOTG products. Keep in complete control, and be able to pull the plug quickly if there is a need to.
http://atariuser.com/portal/atari-to-sell-off-most-of-its-assets-but-questions-remain-unanswered/