Toys International Files for Chapter 11
Toys International filed for bankruptcy last month "to execute an orderly wind-down of its business and sale of its assets," according to the company. It operated Web sites in the United States and Europe as well as 38 U.S. stores.The U.S. Internet shop closed several weeks ago. The European site in Germany is expected to close soon. Both could be accessed at www.toysinternational.com.
The company conducted a moderately successful IPO on Frankfurt's new market in fall 1999. Shares have fallen since, hitting a low of 15 eurocents on March 27. A $12 million revolving credit loan obtained from Wells Fargo Retail Finance in November proved insufficient to rescue the company.
The lender said late last month that Toys International and its parent company, Play Co., were in default and had no "additional borrowing availability under its credit facility." Negotiations for money failed, at least for now.
In the statement published March 30, the company said it "is continuing to hold discussions with potential investors that may be interested in financing the company following this bankruptcy filing."
Chapter 11 proceedings will be halted if new money is found, the company said, but "there can be no assurance that such discussions will eventually lead to such a financing."
Sources familiar with the company said that 2000 was a bad toy year, with even giants like Mattel and Lego recording losses. Also, weather conditions hurt online sales in Europe, a source said.
In October, the San Mateo, CA, company launched TX40, "a Web complex for children and children's products," designed to offer visitors entertainment alongside a chance to buy product, tying them together through a story line. The new platform, billed as the "funkiest toy store in the galaxy," was pitched to investors as giving Toys International a market position unique from other vendors, and it opened a second source of income.
