Atari Inc and three affiliates filed for Chapter 11 bankruptcy in New York over the weekend in a bid to break free from French parent company Atari SA - formerly known as Infogrames - which is said to be struggling with debt.
It is believed Atari US hopes to find a buyer to take the firm private, subsequently allowing it to focus on mobile and digital games, according to the LA Times.
Atari's revenue dropped by 34% in 2012 and 43% the year before. Profits, meanwhile, have also been relatively small, while Atari SA share prices are now worth less than a Euro.
The company is also said to be reliant on London's BlueBay Asset management for cash, which has left Atari US unable to release a number of games currently in development.
Atari Inc has since secured financing worth $5.25 million to continue operations, and will emerge from bankruptcy with little or no debt should it find a buyer.
The Atari name has had a long and confusing history. The original Atari Inc. split into multiple divisions in 1984, with the brand changing hands with Tramel Technology and Hasbro Interactive over the next few decades.
Screenshot Gallery: Atari Arcade Classics...
When Infogrames bought Hasbro and the Atari name in 2001, it changed the name of developer GT Interactive to Infogrames, Inc and finally Atari, Inc. as we know it in 2003.
Last year Atari teamed with Microsoft to launch web-based versions of its classic games.
Pong, Asteroids, Centipede and more are available ad-free in Internet Explorer 9 and 10, or with sponsored messages in other browsers, to celebrate the publisher's 40th anniversary.
The firm is currently working on RollerCoaster Tycoon, Dungeons and Dragons and Atari Casino for mobiles.
Watch Atari classic Astroids on arcades below: