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Index (Atlus) officially begins Civil Rehabilitation Proceedings [4 month deadline]

D

duckroll

Member
http://sankei.jp.msn.com/economy/news/130704/biz13070419010017-n1.htm

The Tokyo district court has approved Index's application for Civil Rehabilitation Proceedings, and the plan lined up is that they will be searching for a sponsor for business transfer as previously expressed by the management. The court has given them 4 months to carry out the proceedings. The deadline is November 5th 2013.

In these 4 months they will be seeking applications from interested sponsors, vetting them, and eventually making a decision on who to transfer the business to. The investment firm GCA Savvian has been appointed as financial advisors for the sponsor search.
 
F

Flayer

Member
I'm sure Atlus are wanted by someone since they do make successful games and have some good franchises.
 
Seth Balmore

Seth Balmore

Member
I don't really mind who ends up owning Atlus as long as they're allowed to continue development the same way they've done all these years. That includes multiplatform support...
 
O

Omikaru

Member
wsippel said:
Sure, but they have to satisfy their creditors. Is Atlus alone worth $250 million? Probably not.
Click to expand...

This is what worries me. Atlus is attractive, but is it with Index's baggage?

My gut tells me the vultures will continue to circle until they have a chance to just get the juiciest cuts (i.e. Atlus) and not have to buy the toxic stuff. It seems to be a pretty big financial investment to take on Index as a whole...
 
R

Randdalf

Member
They'll probably be bought by one of those numerous mobile/social companies, right? Persona 5 iOS and all that.
 
D

duckroll

Member
There's no baggage. Index has filed for bankruptcy. They're not selling the company for 250 million dollars. Right now Index has exactly one successful business venture - the game development and publishing segment. They want to sell that off as quickly as possible while it is still attractive and can fetch a good price, since it can continue running per normal without any interruption.

toddhunter said:
More to the point, Atlus don't make games, the people who work there do.

Given what is going on you might expect a lot of them to move on.
Click to expand...

Why would they move on? A successful business transfer would mean they can continue operations. If no one buys it, and Index is completely wound up, then yes, everyone will have to leave, and then the company and IPs are worth almost nothing without the talent. That is exactly what they are trying to avoid.
 
O

Omikaru

Member
duckroll said:
There's no baggage. Index has filed for bankruptcy. They're not selling the company for 250 million dollars. Right now Index has exactly one successful business venture - the game development and publishing segment. They want to sell that off as quickly as possible while it is still attractive and can fetch a good price, since it can continue running per normal without any interruption.
Click to expand...
That makes sense... I thought the civil rehabilitation thing was to try and sell the company as a whole, but I suppose if they've already given up on that then trying to extract as much money out of the Atlus brand, its IP and talent is the way forward.
 
J

Jubern

Member
Femmeworth said:
So are they just going to sell off the video game division or are they looking for someone to buy the whole company?
Click to expand...

If I understand this correctly, since Atlus is just a brand from the company, they'll look for someone to buy the whole thing with the debts they (Index) have. They're so not letting go of the game division for the sole price it is actually worth paying for.

edit > Okay, understood the situation a bit better thanks to the posts above.
 
T

toddhunter

Member
duckroll said:
Why would they move on? A successful business transfer would mean they can continue operations. If no one buys it, and Index is completely wound up, then yes, everyone will have to leave, and then the company and IPs are worth almost nothing without the talent. That is exactly what they are trying to avoid.
Click to expand...

Well I can't speak for how close knit they are at all, so who knows really. But if I'm a competitor I'm ringing up the talented people and telling them that there is a nice safe job available for them if they want it.

Uncertainty versus certainty is a pretty big motivator.
 
D

duckroll

Member
toddhunter said:
Well I can't speak for how close knit they are at all, so who knows really. But if I'm a competitor I'm ringing up the talented people and telling them that there is a nice safe job available for them if they want it.

Uncertainty versus certainty is a pretty big motivator.
Click to expand...

When THQ was being auctioned off, did the developers in the individual studios who were still developing upcoming games (Volition on Saints Row 4, Relic on Company of Heroes 2, etc) just pack up and leave before waiting for a buyer? No, they didn't. So why would people working on Persona 5 and other upcoming titles just pack up and leave without waiting for a buyer to take over? That makes no sense. It's not like they're sitting on their hands right now not knowing what they will do next. There are several games in active development, and people are going to work and doing what they love as per normal.
 
G

gngf123

Member
PlanetSmasher said:
There is no such third party. Period.
Click to expand...

Correct, poor choice of words.

A third party who would offer them more freedom than a platform holder like Sony is far from out of the question, at the very least they would keep the freedom to change platforms when they want. That was more what I was referring to.

I do expect things to change, but I'd personally rather things not change too much. Of course, if the options are first party or no more Atlus I would obviously take the first option.
 
T

toddhunter

Member
duckroll said:
When THQ was being auctioned off, did the developers in the individual studios who were still developing upcoming games (Volition on Saints Row 4, Relic on Company of Heroes 2, etc) just pack up and leave before waiting for a buyer? No, they didn't. So why would people working on Persona 5 and other upcoming titles just pack up and leave without waiting for a buyer to take over? That makes no sense. It's not like they're sitting on their hands right now not knowing what they will do next. There are several games in active development, and people are going to work and doing what they love as per normal.
Click to expand...

I don't know. I've been in situations where there is a lot of uncertainty about a company. People get offers or seek them out and leave despite having plenty of work to go on with. Others might just see it as a good time to move on. That is just what happens.

THQ in particular let off a lot of staff didn't they? When this sort of thing is happening, people are uncertain and start looking around. Even when a buyer comes in, they never really tend to leave things alone (but let us hope for the best). This too brings instability in one form or another.

A lot of it comes down to how well things are being communicated and how much trust there is in the company. Do you have insight into the current working culture at Atlus?
 
F

Femmeworth

Banned
Another question, with Atlus integrated into Index how could it be extracted? It's not like it's a subsidiary. I'm working with very limited business knowledge, forgive me.
 
E

Eusis

Member
MaschinenZimmer said:
GO MICROSOFT, GO!!
Click to expand...
FUCK THIS.

Seriously they're the worst possible outcome if we're just looking at major players in the game industry; look at RARE and look at where most of Atlus's games go. Either Sony or Nintendo would be kind of awful, but at least you'd have some of their games staying for DD and both of them seem more understanding of Atlus. Here, I don't even want to imagine what they'd do to them.

Nevermind that Microsoft aims for bigger fish on average, Atlus is much closer to an indie developer relative to Microsoft's major developers.

EDIT: Also I'm pretty sure any of the big three would involve shutting down Atlus USA, and I certainly don't want that for Nich and the rest of the crew there. It's why I somewhat seriously think Tecmo Koei's the best of the significant players in the industry, if they really don't have a US division anymore then Atlus USA would just become that instead I imagine/hope.
 
D

duckroll

Member
toddhunter said:
I don't know. I've been in situations where there is a lot of uncertainty about a company. People get offers or seek them out and leave despite having plenty of work to go on with. Others might just see it as a good time to move on. That is just what happens.

THQ in particular let off a lot of staff didn't they? When this sort of thing is happening, people are uncertain and start looking around. Even when a buyer comes in, they never really tend to leave things alone (but let us hope for the best). This too brings instability in one form or another.

A lot of it comes down to how well things are being communicated and how much trust there is in the company. Do you have insight into the current working culture at Atlus?
Click to expand...

You're ignoring what I said about THQ developers entirely though. That's the closest comparison here. :p

Femmeworth said:
Another question, with Atlus integrated into Index how could it be extracted? It's not like it's a subsidiary. I'm working with very limited business knowledge, forgive me.
Click to expand...

Someone puts up a bunch of money, they take over operations, everything else gets closed down or sold off separately. Seems pretty simple to me. Atlus is Index's main business. Nothing else matters.
 
J

Joni

Member
Femmeworth said:
Another question, with Atlus integrated into Index how could it be extracted? It's not like it's a subsidiary. I'm working with very limited business knowledge, forgive me.
Click to expand...
The integrated departements like legal, HR and stuff aren't that interesting anyway. They can be cut away and replaced by the departements of the buyer.
 
D

duckroll

Member
Mihael Mello Keehl said:
The deadline is nov 5th. So they could announce a partner at anytime I think
Click to expand...

Right, they probably won't wait until the last moment to make any decision. If they do that would be a bad sign, since it suggests there isn't a consensus on how to proceed. But they'll probably take a month or two at least to do due diligence I think. Maybe we'll have news before TGS?
 
O

Omikaru

Member
Femmeworth said:
Another question, with Atlus integrated into Index how could it be extracted? It's not like it's a subsidiary. I'm working with very limited business knowledge, forgive me.
Click to expand...
I think Index has a "gaming division" of some sort, that's pretty much what Atlus formerly was, only more integrated into Index. I figure if they sell that along with the Atlus brand and all the IP and talent associated with it, then that is pretty much a sale of Atlus.

Leezard said:
I'm not advocating Nintendo picking them up, but aren't most Atlus games already region locked?
Excluding a couple of Vita titles, they typically are region locked. Even P4A.
Click to expand...
P4A is the only region locked Atlus game on region free systems. All of their other PS3, PSP, DS and Vita games are not locked.

The point is, if Atlus go only Nintendo they are forever region locked on account of that hardware manufacturer's policies, whereas if they are independent at least they can be region free on systems that have the option to be region free. P4A had very particular circumstances related to reverse importation, and I don't think what happened there necessarily applies to any of their other games on region free platforms.
 
T

toddhunter

Member
duckroll said:
You're ignoring what I said about THQ developers entirely though. That's the closest comparison here. :p
Click to expand...

I did start with "I don't know" ;)

duckroll said:
Someone puts up a bunch of money, they take over operations, everything else gets closed down or sold off separately. Seems pretty simple to me. Atlus is Index's main business. Nothing else matters.
Click to expand...

I guess I'm speaking from experience, albeit in different industries (and culture, which probably invalidates a lot of my point of view). I've been involved in the purchase of many companies, that were successful in their own right (including my own). Despite the good intentions to leave them as they are, there is still always a process of integrating them into a new work culture and good people unfortunately always end up leaving before, during and after.
 
F

Femmeworth

Banned
duckroll said:
Someone puts up a bunch of money, they take over operations, everything else gets closed down or sold off separately. Seems pretty simple to me. Atlus is Index's main business. Nothing else matters.
Click to expand...
I guess I'm picturing Index as being bigger than it actually is.

Edit: Is the Atlus division physically located with the rest of Index?
 
W

wsippel

Banned
duckroll said:
There's no baggage. Index has filed for bankruptcy. They're not selling the company for 250 million dollars. Right now Index has exactly one successful business venture - the game development and publishing segment. They want to sell that off as quickly as possible while it is still attractive and can fetch a good price, since it can continue running per normal without any interruption.
Click to expand...
Filing for bankruptcy isn't a get out of jail card, the debts aren't simply erased. Creditors will probably only get a fraction of their money back, but how much that will be needs to be negotiated with a potential investor.
 
J

Joni

Member
Femmeworth said:
I guess I'm picturing Index as being bigger than it actually is.
Click to expand...
No, you're just thinking they're more integrated than they are. Atlus is still a seperate department within Index that can be easily cut loose.

alstein said:
Wouldn't Madhouse have some value as well?
Click to expand...
They own a bit of stock in the company, they don't own Madhouse. (They sold most of their stock in 2011 to Nippon Television.)

wsippel said:
Filing for bankruptcy isn't a get out of jail card, the debts aren't simply erased. Creditors will probably only get a fraction of their money back, but how much that will be needs to be negotiated with a potential investor.
Click to expand...
No, they will have to negotiate with the seller. Index is selling of its parts to be able to pay back its creditors. If they make enough to pay off their entire debt by selling of all their components, the creditors have no say in it.
 
B

Black Republican

Member
duckroll said:
Right, they probably won't wait until the last moment to make any decision. If they do that would be a bad sign, since it suggests there isn't a consensus on how to proceed. But they'll probably take a month or two at least to do due diligence I think. Maybe we'll have news before TGS?
Click to expand...

you have any calculated guesses what company might approach them?
 
D

duckroll

Member
wsippel said:
Filing for bankruptcy isn't a get out of jail card, the debts aren't simply erased. Creditors will probably only get a fraction of their money back, but how much that will be needs to be negotiated with a potential investor.
Click to expand...

Debts are actually in fact, simply erased. After creditors get as much as they reasonably can from the proceedings, the slate is wiped clean. That's what bankruptcy is. Debts owed by a company are not transferable onto individuals. No one expects to get 250 million out of Index. It's literally impossible, and if they allow the only profitable business in the company to fail, they will get even less from what's left.

Black Republican said:
you have any calculated guesses what company might approach them?
Click to expand...

An editor on the Japanese Engadget site suggests that likely candidates will include Sega, Marvelous AQL, and Gungho. In terms of game companies, they're the big ones who have any reason at all to rescue Atlus. Sega has a distribution deal with Index for Atlus games. Marvelous AQL and Gungho are both big multimedia companies who have shown interest in acquiring talent and studios in relatively niche game spaces, so one more would not be a surprise.
 
L

Leezard

Member
Omikaru said:
The point is, if Atlus go only Nintendo they are forever region locked on account of that hardware manufacturer's policies, whereas if they are independent at least they can be region free on systems that have the option to be region free. P4A had very particular circumstances related to reverse importation, and I don't think what happened there necessarily applies to any of their other games on region free platforms.
Click to expand...

Fair enough, but they still do release several games on region locked (Nintendo) platforms, making "region locked Atlus games" more of a current reality rather than only a possibility if Nintendo would buy them. It does indeed become the only possibility for their games rather than one possibility, though. At least the status quo can be maintained if a third party buys them.
 
L

Labadal

Member
duckroll said:
An editor on the Japanese Engadget site suggests that likely candidates will include Sega, Marvelous AQL, and Gungho. In terms of game companies, they're the big ones who have any reason at all to rescue Atlus. Sega has a distribution deal with Index for Atlus games. Marvelous AQL and Gungho are both big multimedia companies who have shown interest in acquiring talent and studios in relatively niche game spaces, so one more would not be a surprise.
Click to expand...

I really hope it isn't Sega.
 
D

duckroll

Member
Labadal said:
I really hope it isn't Sega.
Click to expand...

I would personally rule Sega out entirely because I don't believe that Atlus serves their business needs well, and it isn't a worthwhile investment for them considering their current publishing direction internationally. I think Gungho is a very, very strong possibility. But hey, I'm not an expert!
 
W

wsippel

Banned
duckroll said:
Debts are actually in fact, simply erased. After creditors get as much as they reasonably can from the proceedings, the slate is wiped clean. That's what bankruptcy is. Debts owed by a company are not transferable onto individuals. No one expects to get 250 million out of Index. It's literally impossible, and if they allow the only profitable business in the company to fail, they will get even less from what's left.
Click to expand...
That's the important point. Whoever wants to buy Index or part of Index has to negotiate with their creditors and make an offer. And as you said, they'll try to get as much money back as they can. Whatever is left at the end of the bankruptcy proceedings is erased, but they're not there yet.
 
D

duckroll

Member
wsippel said:
That's the important point. Whoever wants to buy Index or part of Index has to negotiate with their creditors and make an offer. And as you said, they'll try to get as much money back as they can.
Click to expand...

Yeah, no shit, they're buying something so clearly there's a cost involved. But there isn't any "baggage" with regards to the 245 million debt, nor is the sale price fixed at 250 million or whatever. Those are misconceptions which have to be corrected. It doesn't matter if they owe creditors 245 million or 500 million or 5 billion dollars. In the end the question is how much money they can extract from what's left. If the profitable part of the company has a value of 80 million for example, that's what they'll end up getting. How much they are ultimately owed no longer matters.
 
L

Labadal

Member
duckroll said:
I would personally rule Sega out entirely because I don't believe that Atlus serves their business needs well, and it isn't a worthwhile investment for them considering their current publishing direction internationally. I think Gungho is a very, very strong possibility. But hey, I'm not an expert!
Click to expand...

Those are basically the reasons I don't want Sega to have anything to do with a possible deal. I looked up Marvelous AQL and Gungho, and it seems like companies that could do well with the games Atlus have. I just hope that if Gungho buys them, everything doesn't get turned into a MMO.
 
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