Let's face it, noone wants ATI or Nvidia to go bankrupt. I for one don't. All of us who visit these forums would have so little to talk about (or fight about =] ).
We love to look at the engineering and operations aspects of GPU makers, but we often forget or choose to ignore the business side which can be the uglier of the three.
I don't know if Nvidia was in trouble for the same reasons as ATI was and currently is. I do remember that Nvidia pretty much received a slap on the wrist and issued a statement that their accounting practices would be done with a fine tooth comb. ATI on the other hand has been sued by shareholders and punished by the SEC which in my mind tells me that ATI's actions were a bit more severe than Nvidia's.
I personally think that this suit is in fact frivolous. My guess is that they will lose because ATI is having yield issues which can not be forecasted accurately and this should be taken into account when deciding by a judge if this legal action is justifiable.