Iconic toy company files Chapter 11 bankruptcy

Some toy brands transcend generations. That's actually pretty rare as many toy sensations burn bright, then flame out.

Cabbage Patch Kids, for example, were so big they led to fights in stores, but they barely exist now. The same can be said of pogs, those rubber bracelets every kid had to have, and Beanie Babies.

People used to hoard Beanie Babies thinking that they were an actual investment. And, they proved to be, the way that buying Enron shares was technically an investment.

Most toy sensations tend to be a lot more like Furby, than enduring brands that parents share with their children. There are a lot more Zhu Zhu Pets than there are Legos, Mr. Potato Heads, and other brands that stand the test of time,

When a company has an enduring toy brand, that's usually enough to keep it healthy financially no matter what trends are happening. Barbie, for example, has seen some ups and downs in popularity, but sales have always helped keep Mattel in a strong financial position.

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Now, however, the producer of some of the best-known toy brands — toys that transcend generations — has filed for Chapter 11 bankruptcy.

Few toy brands actually stand the test of time. Image source: Shutterstock

Care Bears, Lincoln Logs company faces financial problems 

You may not know the name Basic Fun, but you almost certainly know some of the toy lines it produces.

Basic Fun! has a portfolio of powerhouse brands that include Care Bears, Tonka, Lite Brite, K’nex, Lincoln Logs, Tinker Toys, Playhut, Uncle Milton, Fisher Price Classics, Mash’ems, and Littlest Pet Shop. All of us at Basic Fun! are dedicated to enriching lives and creating unforgettable moments through imaginative play," the company shared on its website.

Basic Fun also has an impressive array of big-name brand partnerships.

"The company is proud to have valued licensing partnerships to include Hasbro, Disney, Mattel, Nintendo, Netflix, Coca-Cola, Universal, Cloudco Entertainment, NFL, and NBA," according to its About Us.

Basic Fun has leaned into offering a lineup of classic brands that transcend generations.

"Our iconic brands and broad product portfolio are sold by leading retailers and distributors in over 60 countries around the world. Basic Fun! has an omnichannel go-to-market strategy with a strong presence online, in-store, and in family entertainment venues," the company added.

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Basic Fun files Chapter 11 bankruptcy

Basic Fun has filed for Chapter 11 bankruptcy protection with debts between $50 and $100 million with assets in the same range. The company entered into voluntary bankruptcy proceedings with a plan to emerge from it quickly.

"Basic Fun seeks approval of $50 million in debtor-in-possession (DIP) financing from affiliates of Great Rock Capital, as well as a $15 million subordinate facility to be provided by RBC and the company’s founders, Jay Foreman and John MacDonald. The move comes following years of toy industry turmoil, and the company believes that the financing, once approved, will allow it to continue the normal operation of its business through restructuring proceedings," Toybook reported.

In its bankruptcy filing, Basic Fun reported that it had between 200 and 299 creditors.

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The company's CEO Jay Foreman said that his company's problems date back to the death of Toys 'R' Us in 2018 and cites Covid as exacerbating those problems.

“We intend to use the restructuring process to put those challenges in the rear-view mirror, enabling us to secure a successful future and position us for growth and value creation,” he said.

After the filing, Basic Fun expects to continue its normal operations and does not expect any delays or changes in its ability to serve its customers.