Bankruptcy Court Approves 4Kids’ Chapter 11 Reorganization PlanDecember 13, 2012 at 8:30 pm | Posted in 4Kids, Other Stuff | Leave a comment
Today, the U.S. Bankruptcy Court for the Southern District of New York approved 4Kids Entertainment’s Chapter 11 reorganization plan, sending the former longtime licensee of the Yu-Gi-Oh! franchise out of bankruptcy protection. 4Kids’ plan grants all of its creditors full payment in cash on their allowed claims while still preserving its equity.
4Kids’ New York-based parent company will now merge with a newly formed Delaware subsidiary, with the Delaware subsidiary remaining as the surviving company. 4Kids will retain all of its common stock during the reincorporation, which will be automatically converted into the common stock of the Delaware entity.
The reorganized 4Kids emerges with eight employees. It will remain in the licensing business, having retained numerous properties during the bankruptcy process, including several animated children’s titles like Chaotic and Dinosaur King. 4Kids intends to continue adding new properties to its portfolio. However, because Konami and Saban acquired its production and broadcast teams respectively, 4Kids itself will no longer produce or distribute any of its properties and the relevant subsidiaries that managed these operations will be dissolved.
Additionally, 4Kids will be venturing into the world of sports licensing, with newly appointed heads of the reorganized 4Sight subsidiary Mark Panko (President) and Stacy Weiland (COO) taking the helm. 4Kids intends to pursue product design and development projects and consumer goods production.
Longtime 4Kids exec Bruce Foster will serve as the interim CEO and CFO of the reorganized 4Kids parent company. 4Kids’ Board of Directors will be trimmed to three: Jay Emmett (Chairman), Duminda DeSilva, and Wade Massad.
4Kids’ reorganization proceedings advanced at an accelerated pace. The company first unveiled its plan on October 5, which the court deemed acceptable on October 30. 4Kids began soliciting acceptances from its shareholders and creditors for the plan on November 7, with the voting and objection period lasting until December 5. The votes were overwhelmingly (99.93 percent) in favor of 4Kids’ reorganization.
And what became of the claim by The Pokemon Company International over various alleged “deficiencies” in payments? As I briefly touched upon when the Yu-Gi-Oh! lawsuit first came to light in March 2011, TPCi alleged in early 2010 that 4Kids owed it nearly $4.7 million in royalties and other payments, the amount of which was later adjusted to $6.2 million. 4Kids subsequently conducted its own audit of TPCi, reaching quite the opposite conclusion. Though the parties were supposedly making headway in reaching a resolution, the Yu-Gi-Oh! lawsuit and 4Kids’ bankruptcy brought a halt to the parties’ negotiations. Since the end of July 2012 however, talks had resumed, and earlier this month, both parties agreed to settle, with TPCi receiving $1 million.
So that’s that!
4Kids Entertainment entered Chapter 11 bankruptcy protection on April 6, 2011 to defend itself from Japanese Yu-Gi-Oh! licensors TV Tokyo and ADK/NAS, who attempted to seize the rights to the Yu-Gi-Oh! property after they terminated their dealings with 4Kids.