Loki Software sent along a letter to their customers attempting to clarify a bit about their status following their filing for Chapter 11 bankruptcy protection (story). Here's the letter:

Dear Friend of Loki:

As you may know, on August 3, 2001, Loki filed a Chapter 11 reorganization. As our valued customer, we wanted to let you know why we have elected to reorganize and how, if at all, it will impact our ongoing business.

Under US law there are two kinds of bankruptcy:

1) Chapter 7 is a liquidation. We have not filed a Chapter 7 and have no intention of doing so.

2) Chapter 11 is a reorganization. This will allow us to deal with our creditors fairly and equitably and at the same time continue to operate the company. We are still shipping products and porting new games and expect to be doing so for a long, long time.

Most of the debts we are restructuring through the Chapter 11 are well over a year old. They represent mistakes made by a young company. We've learned from our mistakes and become cash positive. Going forward we have every confidence that Loki will continue to be successful and grow.

We cannot say for certain how long Loki will remain in Chapter 11. It depends on many factors. However we do intend to bring the process to a conclusion as quickly as possible. Once our plan of reorganization is accepted by the court, our creditors will receive an agreed upon settlement and all other prepetition obligations will be fully and finally discharged.

During and after the reorganization your orders will continue to be honored. We will continue to provide end user support, bug fixes and new products. Negotiations are in progress to guarantee Loki a steady stream of additional AAA games to bring to Linux.

Most importantly, we'd like to thank each of you for your support over the years. Without our customers, we are nothing. The outpouring of support we have received in the last few days has been overwhelming, and we will continue to do everything we can to merit that support.

Kind regards,

Scott Draeker President, Loki Software