3DO Files For Bankruptcy

In a prepared statement, CEO Trip Hawkins said the company was is expected to continue to operate as it works through the bankruptcy process. "This filing gives us more time to complete transactions in the interest of our stakeholders," Hawkins said. "While we hope that this news will generate additional new opportunities, at this point we are focused on pursuing either the sale of the entire company or the sale of its assets." Hawkins had been a sort of lender-of-last-resort for the company, propping up the company with his own personal wealth to the tune of about $12 million as company cash reserves grew low. But the company continued to spiral downward. Last year, the company was almost delisted from the NASDAQ market after failing to meet share-price targets, but managed to stay on the board by issuing a reverse 1-for-8 stock split. As recently as March 26, the company seemed bullish on its future. It secured a $10 million line of credit with IIG Trade Opportunities Fund, prompting this quote from Hawkins: "We are emerging again as an operating company and have passed through some critical stages." Unfortunately, as the quarter drew to a close, poor sales in the March quarter left it unable to fully tap that credit, and Hawkins apparently did not want to bail the company out one more time. On May 8, the company warned employees that there would be a mass layoff in July. By law, large companies are required to give 60 days notice when mass layoffs are looming. On May 13, 3DO announced that it was exploring its options, including a merger or selling publishing rights to its games in progress. Apparently those efforts did not bear out. Today, as a result of the bankruptcy filing, 3DO shares have plummeted 83 cents to a 50-cent share price: down 62 percent.