The company behind toy brands including Littlest Pet Shop and Care Bears, Basic Fun! has announced it has filed for Chapter 11 bankruptcy protection as part of a ‘strategic action’ to future-proof the business.
As reported by The Toy Book’s James Zahn, Basic Fun! announced on Friday that it has filed for Chapter 11 bankruptcy protection. The filing, made in the District of Delaware, covers Basic Fun Holdco, LLC, Basic Fun, Inc., TBDUM, LLC, TGS Acquisition, and K’Nex UK Limited.
While the news has taken many by surprise, CEO Jay Foreman was quick to explain the reasons for the move, telling The Toy Book that while the filing was ‘humbling’, it should be viewed as an opportunity for growth: “Like some old houses, some are for knocking down and some have great bones and just need a new roof and some paint. Basic Fun has great bones! We have a solid foundation and we have the means to fix our roof and put a new coat of paint on the walls, not to mention a new game room! We have great people and amazing licensing and vendor partners standing with us as we are poised to have an amazing year led by Littlest Pet Shop and anchor classic lines like Care Bears, Tonka, and Lite-Brite.”
According to The Toy Book, the company is seeking approval of $50m in debtor-in-possession (DIP) financing from affiliates of Great Rock Capital, as well as a $15m subordinate facility to be provided by RBC and the company’s founders, Jay Foreman and John MacDonald.
In his comments to James, Jay assured the industry: “The fact that this process is done through a bankruptcy court is unfortunate when you are not bankrupt and we are not. We are solvent, capitalised, and open for business.”
He added: “Many of my friends and colleagues in the business have checked in to see how I’m doing and how the company is doing and I very much appreciate that and thank you. I’m fine and we’re fine. I try to always do the right thing, treat people well, and dedicate myself to my company, partners, and this industry. That’s my brand and the support I’ve been getting is testimony to doing the right thing.”
Jay’s full statement can be seen here.
