With the price of video games so high, it is a wonder why the companies are struggling financially. Recent news has surfaced about the fate of Team Bondi, the developer of a popular video game considering bankruptcy. The game L.A. Noire follows the adventures of a detective solving crimes and protecting citizens, a premise takes a unique spin on a popular genre.
Nothing official has been released, although reports suggest the company is also considering merging with another game developer as an attempt to resolve its debt problems. The Australian based game developer has been reported to have sold some assets as it moves forwards with debt resolution plans.
Chapter 11 Bankruptcy
One of the biggest benefits in seeking bankruptcy protection would be the increased potential to keep the company in operation. Debts could be reduced, business operations continue and profitability could return. Even further, programmers, game designers and marketing employees would likely be saved from, what seems like, an impending lay off.
Chapter 11 bankruptcy offers businesses debt relief through two avenues. The first is debt elimination through asset liquidation and the termination of business operations. In other words, the company is closed and all remaining assets are sold in order to satisfy creditors. The company may also pursue debt reorganization and remain in operation. In many cases, debt reorganization may mean merging with another company or allowing an investor to buyout the rights to the company in return for assuming the company’s debts.
In this case, many video game enthusiasts are hoping for debt reorganization. Although its newest game is the first to be released by the company, it sold nearly 3.5 million copies since its release. This game developer isn’t the first to experience financial troubles and bankruptcy, many other companies have fought the debt resolution battle while working to expand their niche in the entertainment industry.