In September 1982,[2] they set up another chipset project under a new company in Santa Clara, California, called Hi-Toro (which meant "high bull" to them,[3] later renamed to Amiga), where they could have some creative freedom.

The initial start-up financing of Amiga Corporation was provided by three dentists in Florida, who later regained their investment once Commodore bought the company.

By the end of the year, Atari was losing about $1 million a day, and its owner, Warner Communications, sought to sell the company.

Tramiel visited Mindset (run by Roger Badersher, former head of Atari's Computer Division), and Amiga.

Tramiel's design for his next generation computer was 95% completed by June (which only fueled speculation that Shivji and other engineers had taken technology with them from Commodore).

With the deadline fast approaching and still not having enough funds to finish development, the Amiga crew went on alert after having heard rumors that Tramiel was in closed negotiations to complete the purchase of Atari in several days.

Seeing a chance to gain some leverage, Tramiel immediately used the situation to countersue Commodore through its new (pending) subsidiary, Amiga, which was done on August 13, 1984.

Finally in the fall of 1984 Commodore informed the team that the Lorraine project was active again, the chipset to be improved, the OS developed and the hardware design completed.

Over the next few years many employees felt Commodore's management proved to be as annoying as Atari's, and most of the team members left, were laid off, or were fired.