Yahoo! Finance reports that 4Kids Entertainment files for a Chapter 11 bankruptcy, which according to the U.S. Bankruptcy Code, companies who file under Chapter 11 are able to maintain business assets, which may or may not include licenses, in order to attempt to reorganize. In simple terms, 4Kids still exist.
Its subsidiary, 4Kids Entertainment International, Ltd. is not part of the bankruptcy filling. In conjunction with the Chapter 11 filing, 4Kids also filed a variety of first day motions that will allow the Company to continue to manage operations in the ordinary course.
"We want to assure our clients, business partners and licensees that during the pendency of the bankruptcy, 4Kids will continue to provide the same level of service and dedication that it has in the past," said Michael Goldstein, interim Chairman of 4Kids Entertainment, Inc. "The Company will also continue to explore its strategic alternatives, including, the possible sale of the business or reorganization as a stronger and more focused company."
As for their lawsuit with the Japanese companies about the Yu-Gi-Oh! franchise, the lawsuit stays until the court may order otherwise. "We have made every effort to reach agreement with the Licensors," said Goldstein.
"When the Company did not receive a positive response from Licensors to its settlement proposal, the Board of Directors was left with little choice but to authorize the filing of a bankruptcy petition under Chapter 11 in order to best preserve the business and assets of 4Kids Entertainment. We continue to believe that the purported termination of the Yu-Gi-Oh! Agreement was wrongful and that 4Kids’ assessment of the audit claims will be vindicated in court. If the Court rules in favor of the Company, 4Kids will pursue the full measure of damages for the significant injury the Licensors have caused to the business of 4Kids," concluded Goldstein.