Iconic toy company founded in 1946 at files for bankruptcy - blaming demise of Toys R Us
A toy company behind favorite brands including Tonka, K'nex, and Care Bears has filed for bankruptcy.
Basic Fun also owns Playhut, Fisher Price Classics, Lite Brite and Lincoln Logs, and makes toys for Walmart, Target and amusement parks.
Tonka - famous for its rugged toy trucks - was founded in 1946 and celebrated its 75th birthday two years ago with Shaquille O'Neal.
Meanwhile, Care Bears were one of the biggest toys of the 1980s after being launched at the start of that decade.
It also has licensing deals with Disney, Mattel, Nintendo and Coca-Cola.
Bosses said a key factor was the bankruptcy of another company - retailer Toys R Us. The 2018 demise of the toy store, the biggest in America, cut off one of its main ways of selling items.
Shaquille O’Neal helped Tonka celebrate 75 years of making toys 2022
They also blamed Covid and supply chain issues following the pandemic for running up losses.
Basic Fun will continue operating as it bids to restructure under Chapter 11 protection, after filing its case in the District of Delaware on June 28.
Basic Fun was only founded in 2009 by Jay Foreman, but since then it has bought older, storied brands or licensed iconic toys.
It then makes the toys, markets them and sells then via stores and online.
Foreman explained how a string of problems has mounted up - but that the company plans to 'put those challenges in the rear-view mirror' as it bids to 'secure a successful future.'
He said: '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 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.'
When Toys R Us went under, it was providing $35 million a year in sales for Basic Fun. The toy chain owed $6 million at the time, and only $1 million was collected.
Although Toys R Us reopened, it was under new management and as a much smaller retailer.
With Basic Fun also making toys for amusement parks, it was badly hit when Covid shut these down in 2020 and into 2021.
Basic Fun will ask the bankruptcy court for approval for new bank finance. Founders - Foreman and John MacDonald - will also provide up to $5 million in loans.
With that, it says it can stay in business.
In 2019, Basic Fun acquired Tonka - its best known brand - from Hasbro, which had owned it since 1991.
Tonka, originally based in Mound, a suburb west of Minneapolis, began in 1946 as Mound Metalcraft.
Founders Al Tesch, Avery Crounse, and Lynn Baker created the business to produce metal items like tie racks and gardening tools.
In 1947, Mound Metalcraft began making metal toys and rebranded the year after as Tonka Toys, named after nearby Lake Minnetonka.
By 1968, Tonka had moved it HQ from Mound to offices just west of Minneapolis.
When Toys R Us went under, it was providing $35 million a year in sales for Basic Fun
Care Bears is another of Basic Fun's well known toy brands. They were a huge hit after launching in 1982
K’nex launched in the US in 1992. The toy brand was bought by Basic Fun in 2018
Kids clamor for Tonka trucks in the 1950s
Between 1974 and 1975, the company achieved $102 million in annual sales and expanded to factories in eight countries. At its peak, the Mound plant employed over 2,000 people.
In 1983, Tonka closed the Mound plant and relocated all manufacturing to El Paso, Texas, and Juarez, Mexico.
Chapter 11 is considered a reorganization bankruptcy - and companies enter it with the intention of staying in business. It differs from the more serious Chapter 7, which indicates a business has no intention of carrying on and will sell all its assets.
In recent months, there has been a spate of bankruptcies adding to store and restaurant closures.
