Earlier this month, GameTech International, Inc., and various related entities (collectively, "GameTech"), filed chapter 11 petitions for bankruptcy in the United States Bankruptcy Court for the District of Delaware. According to GameTech's Declaration in Support of its Chapter 11 Petitions (the "Decl."), the company entered the electronic bingo business in 1994 and the video lottery terminal ("VLT") and slot machine business in 2007. Decl. at *5. Based in Reno, Nevada, GameTech is a Delaware corporation that was incorporated in 1994. GameTech also does business under GameTech Canada, a Canadian corporation and GameTech Mexico, a Mexican corporation. Decl. at *3.
The bingo segment of GameTech's business leases electronic bingo equipment and licenses operating software throughout the U.S. and Canada. The company generates revenue through leasing and licensing fees with nonprofits, Native American tribes, casinos and other users of its equipment and software. As for its VLT business, GameTech produces slot machines, video poker and other games and software. Decl. at *3. GameTech's total revenue for 2011 exceeded $30 million. The company expects revenues to drop in 2012 and then increase again in 2013. Id.
GameTech attributes its need for bankruptcy protection to a couple of factors. First, the gaming equipment market has become more competitive ever since 2008. Further, GameTech's acquisition of the VLT business in 2007 has resulted in a "severe financial and operational strain" on the company. Decl. at *7. The VLT acquisition, coupled with the construction of new corporate headquarters, created liquidity problems which prevented GameTech from investing in technology upgrades. Without the upgrades, GameTech has had trouble competing in the electronic gaming market. Decl. at *8.
The GameTech bankruptcy is due in part to the alleged actions of one of the company's competitors. According to its Declaration, prior to bankruptcy GameTech negotiated a forbearance agreement with its lenders. The forbearance agreement expired on June 30, 2012. Prior to its expiration, however, GameTech's lenders sold their rights and obligations under the credit agreement to one of GameTech's competitors. Thereafter, the competitor notified GameTech that it was unwilling to further extend the forbearance agreement. Soon after, the competitor sent GameTech a proposed merger agreement wherein it intended to acquire the company. Once negotiations between GameTech and its competitor fell apart regarding the terms of a merger, GameTech filed its petitions for bankruptcy in Delaware. Decl. at *8-9.
The GameTech bankruptcy is before Judge Peter J. Walsh. GameTech is represented by the law firm Greenberg Traurig.