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Atari Inc., a pioneer of video games, filed for chapter 11 in January, saying that it wanted to sell its portfolio of more than 200 video games to a highest bidder, but it is looking like most creditors will only recoup a fraction what they are owed, the Wall Street Journal reported yesterday. After it reached out to more than 180 potential purchasers from the videogame and financial worlds, Atari received only 15 preliminary bids. None of those offers were deemed "acceptable" by the company, so it decided to sell off its assets in pieces. A July auction fetched Atari a total of $5.1 million for its "Humongous," "Total Annihilation" and other smaller franchises. The company failed to sell the intellectual property related to its Atari name as well as its valuable "Rollercoaster Tycoon" and "Test Drive" franchises. It had hoped to get at least $20 million for those assets. Under its bankruptcy exit proposal, Atari will pay off a $3.8 million bankruptcy loan to lender Alden Global Capital. Atari will use any remaining money to pay up to $560,000 to unsecured creditors when it leaves bankruptcy, another $560,000 a year after that and $630,000 the following year, the company said in court filings.

Executives at Pro's Ranch Market have put together a bankruptcy exit plan for the struggling grocery chain, promising to repay some of the company's debts using future profits from its 11 locations across the Southwest, Dow Jones Newswires reported yesterday. Pro's Ranch Market officials said in court filings that they will either look for a new loan or rely on money from Provenzano family members who own the chain, which caters to Hispanic shoppers by selling imported food products from Mexico and Central America. That money, along with future store profits, would help pay off the company's suppliers and other unsecured creditors who are owed at least $19 million. Under the plan, the company would repay its biggest debt—a $48 million loan handled by Bank of America—an unspecified "discounted" amount within six months of its exit from bankruptcy protection. If the bank votes to reject the plan, it will get between $8 million and $10 million over a 10-year period.

Bankruptcy Judge Shelley Chapman blocked a proposed appointee to a committee to oversee the bankruptcy auction of broadband company LightSquared LP, citing a conflict of interests, and admonished the company for making the nomination, Reuters reported yesterday. Donna Alderman cannot be part of the committee because she could be seen as having a bias against satellite television company Dish Network Corp., which is seeking to acquire LightSquared's spectrum, Judge Chapman said. Alderman, a former director at satellite operator DBSD, lost her job when Dish acquired DBSD in 2011, then unsuccessfully sought $7 million from Dish for her role in generating value for DBSD's estate. She ended up with $750,000 in severance.

An outpatient rehabilitation-services provider purchased by a private-equity firm last year is preparing to file for chapter 11 bankruptcy protection in the next several weeks, as it struggles with accounting concerns and a high debt load, Dow Jones Daily Bankruptcy Review reported today. Physiotherapy Associates, which carries about $325 million in debt, will begin soliciting votes from creditors on a reorganization plan in early October. The company aims to file a pre-packaged bankruptcy plan likely around late October or early November.

While BlackBerry has found a buyer through the the $4.7 billion offer by Fairfax Financial Holdings, the action to take the company private does not necessarily resolve the smartphone maker’s problems, according to commentary by Prof. Stephen Lubben in yesterday's New York Times DealBook blog. There is no guarantee that Fairfax will close the deal, according to Lubben, and while its letter of intent includes a go-shop provision, it is unclear whether a rival suitor will surface. BlackBerry announced on Friday that it expected to report a quarterly loss of nearly $1 billion and planned to lay off about 4,500 people, or 40 percent of its workforce. The challenge BlackBerry faces is reducing its operations as its customer base shrinks. Companies that fail to adjust to current reality can quickly find themselves insolvent as they try to pay for the infrastructure of an older, grander operation with the revenue of a newly smaller business. The only way BlackBerry can avoid bankruptcy, according to Lubben, is to shrink its costs along with its size.

AMR Corp. and US Airways Group Inc. are seeking a court order requiring government officials to disclose the identities of people interviewed before filing a lawsuit seeking to halt the airlines’ proposed merger, Bloomberg News reported yesterday. The Justice Department has refused to turn over the names of those who were interviewed during the investigation of the proposed merger, the airlines said in a court filing yesterday. The U.S. claims the proposed merger of AMR’s American Airlines and US Airways would reduce competition, while the airlines defend the deal as good for consumers. The case is scheduled to begin trial Nov. 25.

Peabody Energy Corp, which created now-bankrupt Patriot Coal through a spin-off, said that an offer to settle claims relating to health care benefits for Patriot Coal retirees had been rejected by the United Mine Workers of America, Reuters reported yesterday. Peabody and Patriot have been fighting over the funding of benefits for about 3,100 retirees that Peabody agreed to continue covering after the October 2007 spin-off of Patriot. Peabody said that its mid-August offer to settle all claims with the UMWA could have been used to provide the retirees with lifetime health care benefits comparable to those of Peabody's active corporate employees. Earlier this month, Peabody said that it had no obligation to fund health and pension benefits for Patriot retirees affected by the company's insolvency, arguing that new labor deals between Patriot and the UMWA effectively relieved it of any funding obligations.

US Airways Group and American Airlines yesterday said that they had extended their merger agreement as they fight a U.S. government lawsuit seeking to block the combination, which would form the world's largest airline, Reuters reported yesterday. The companies said that they extended the date by which either airline could terminate the merger pact to either Jan. 18, 2014, or the 15th day following the entry of a court order approving the merger should it be entered on or before Jan. 17, whichever is later. The previous termination date for the deal was Dec. 17.

Lenders to hedge-fund manager Philip Falcone's LightSquared Inc. yesterday questioned the selection of an independent LightSquared director to help oversee a sale of the wireless telecommunications firm, Dow Jones Daily Bankruptcy Review reported today. The lenders in bankruptcy court papers claim that the director, Donna Alderman, isn't independent because she previously sparred with Dish Network Corp., the company currently offering $2.22 billion for LightSquared. A bankruptcy judge is set to hold a hearing today to review rules governing LightSquared's expected auction later this year.

Chrysler Group LLC was forced to file paperwork for an IPO by its second-biggest shareholder yesterday, escalating a spat with main owner Fiat SpA which said it could scale back its commitment to the U.S. automaker, Reuters reported yesterday. Fiat, which owns 58.5 percent of Chrysler, wants to take full control and buy out the rest of the stock owned by the United Auto Workers trust fund, but has balked at the more $5 billion being demanded. In response, the UAW trust exercised a right enshrined in Chrysler's 2009 government-financed bankruptcy to go forward with an initial public offering, stepping up pressure on Sergio Marchionne, chief executive of both automakers, to reach a deal.