Potential bad news about Basic Fun!

[Loa]

https://toybook.com/basic-fun-files-for-chapter-11-bankruptcy-protection/

Basic Fun! filed for Chapter 11 Bankruptcy protection today in a move that it’s calling a “strategic action to significantly strengthen its financial structure and position the company for future success.”

The company known for its extensive assortment of licensed products including Care Bears, Littlest Pet Shop, Lite-Brite, and Tonka, revealed that it, alongside “certain affiliated entities,” filed its case in the District of Delaware this morning. The filing involves Basic Fun Holdco, LLC, Basic Fun, Inc., TBDUM, LLC, TGS Acquisition, and K’NEX UK Limited.

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.

“Since the demise of our industry’s largest toy retailer Toys ‘R’ Us in 2018, through the tumult of the trade wars with China in 2019, COVID-19 in 2020 through 2021, the travails of the supply chain crisis in 2022, inventory overstocks in 2023, and consumer slowdown in the early part of 2024, our industry and Basic Fun have been through a gauntlet of challenges,” says Jay Foreman, Basic Fun’s CEO and majority shareholder. “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.”

At press time, Basic Fun! expects to continue to purchase and sell inventory and to support its licensing, retail, and vendor partners following its financing approval. The company says it plans to present a “comprehensive restructuring plan” an an effort to “emerge from the court-supervised process quickly and effectively.”

[Raindrop]

So sad!  I hope the restructuring allows the company to remain functioning to some degree.  Unfortunately I don't think the most recent pony releases have been super successful.

[Harmonie]

Noooo!! They're the only one producing ponies I will buy. 

(Hasbro post-G3 just isn't doing it, sorry)

[Leave a Whisper]

[DreamvalleyMLP]

Dang, that's no bueno.

Let's hope the restructuring works out just fine, or that they get bought out and continue operations under a new mother company.

This is quite surprising since only last year they invested in new toylines. Making all those little pets must have been quite the investment I think.

I still think they should set up an online store of their own. No need to get approval from retailers for, say, the flutters. They could incorporate a polling station and ask the public directly what they'd like to see. Direct to consumer is what I'd invest in after restructuring.

Let's hope all those jobs get saved!

[Harmonie]

I knowww! The celestial ponies set was ambitious and I hoped that was going to pay off for them! This is so sad. 

There's so much else sad in the world. Please, I need BF to be okay. 

[Ponybookworm]

 
Oh no!!! I keep buying stuff from them to help them out, even if it's just a white Pony to Customise. I have two of the three newest plushies now & am just waiting for Twilight...
I do hope they manage to keep going xxx

[Taffeta]

I think this is bigger than whatever is happening with pony, honestly, it's clearly across multiple lines. The quote doesn't even mention MLP as a main brand.

But there are distribution issues with some of these ponies not getting into stores that carried early lines over here. I think this not about stock shelf sitting but that there was a big gap in production ahead of the Celestials and the current association with My Little Pony in these stores is stock not moving. G5 may well be affecting whether stores want to take a punt on more MLP, even if it's not G5.

Honestly, I wish them the best. But I also think we have been spoiled by the BF line and if it ends here, we should be grateful for what we have had. A company that actually cared about pony, long after their original creators stopped.

[Gator]

They just better get the new plushes to the U.S. before they go under.

[Carrehz]

Oh nooo! It seemed like their new LPS line was doing so well too. I hope they pull through it

[Goanna]

Oh no, that really is sad news

[DreamvalleyMLP]

I think this is bigger than whatever is happening with pony, honestly, it's clearly across multiple lines. The quote doesn't even mention MLP as a main brand.

For sure.

This is just a wild guess of course, but maybe they invested too much too fast. Basic Fun has been expanding its portfolio quite a bit in a short time. And chapt.11 bankruptcy protection is basically a way to hold off creditors while they restructure their financials. Maybe they are betting on the new products to start bringing in money during the protective restructuring phase, allowing them to pay the creditors at a later date without any possible legal costs adding up the bill. Hope this makes sense.

[brightberry]

I do recall an article where Basic Fun complained about the tariffs on China.   The link below isn’t the article but, same thing.

https://youtu.be/uO3YjenJ-gQ?si=PKAGoxCJ1_3zMBiy

And the tariffs were never lifted.

https://taxfoundation.org/research/all/federal/trump-tariffs-biden-tariffs/

And the below policy also had a huge impact on toy manufacturers.  Not only because they can’t use the area, but toys that were already made there are refused entry.

https://www.toyassociation.org/PressRoom2/News/2022_News/us-ban-on-china-xinjiang-region-takes-effect-june-21-2022.aspx

^ And I don’t disagree with the policy because how horrible.  But, all this has raised the price of toys in general.  It takes more than a year of planning to bring a toy to market, so it makes sense that the hurt is spread out and takes time for us to see the results.

[maycrestmom]

yeah I was going to echo that a chapter 11 is actually a smart maneuver for them to as stated above take a financial pause with creditor obligations while they shift into hopefully bigger and better supply-chain and distribution growth areas.  So much in banking is in flux right now and I believe that BF is timing their restructuring at a very opportune time.  They know they have many successful toy lines so here is hoping it's more a Trump style chapter 11 - protect the principal and leverage time to their benefit