Toy Company Basic Fun Files for Chapter 11 Bankruptcy amid Industry Challenges

Toy company Basic Fun, known for iconic toys like Lite Brite and Care Bears, has filed for Chapter 11 bankruptcy, citing the impact of the Toys R Us bankruptcy in 2017, the COVID-19 pandemic, and supply chain issues. The company reported liabilities and assets of $50 million to $100 million, with debts of $11.6 million to suppliers and creditors.

Despite the challenges, Basic Fun plans to continue operations during restructuring and stay in business post-bankruptcy. The company is seeking court approval for $50 million in financing from Great Rock Capital and additional financing from Royal Bank of Canada.

Established in 2009, Basic Fun has built its business strategy on acquiring toy companies and products through mergers and acquisitions. Licensed products generate about 70% of the company’s revenue. The company’s founders, Jay Foreman and John MacDonald, have also agreed to provide up to $5 million in loans to support the restructuring process.

Basic Fun has faced economic challenges in recent years, including the bankruptcy of Toys R Us, which was its largest customer, in 2017. The company’s amusement division also experienced a significant loss in sales due to the pandemic in 2021.

With the financing in place, Basic Fun aims to emerge from bankruptcy as a going concern and continue to provide quality toys to its customers. The company employs about 112 people in the U.S. and nearly 70 employees in Canada, the U.K., and Hong Kong.