KidKraft, a well-known children’s toy company, has recently filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Northern District of Texas.
The company announced on Friday that the prepackaged plan involves selling its U.S. and Canadian assets to Backyard Products, the nation’s largest maker of backyard sheds and playsets, with the deal expected to close within the next two months, subject to court approval.
To support the restructuring process, KidKraft has secured $10.5 million in new debtor-in-possession financing from Gordon Brothers affiliate 1903 Partners, pending court approval.
The company will also begin proceedings with the Canadian Bankruptcy Court, while its operations in Europe, the Pacific, and Asia will not be affected by the restructuring.
KidKraft’s president and CEO, Geoffrey Walker, remains optimistic about the company’s future, stating, “Today’s announcement marks an important step forward for KidKraft that will position us to continue investing in our industry-leading products and delivering for our valued customers well into the future.”
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Despite the challenges that led to the bankruptcy filing, which the company blames on “significant headwinds” that impacted its liquidity, KidKraft hopes to continue its manufacturing and distribution operations.
The company has filed motions seeking court approval to maintain employee wages, benefits, and customer programs throughout the restructuring process.
KidKraft’s bankruptcy filing comes during a challenging period for the toy industry, with major companies like Mattel and Hasbro reporting drops in sales and revenue. The toy industry saw an 8% decline in sales in 2023 compared to the previous year, according to a report by Circana.
The Dallas-based company, owned by MidOcean US Advisor, has been a leader in sustainable wood-based play products, with a presence in over 90 countries through partnerships with global retailers and direct-to-customer sales. However, recent unknown financial strains have apparently led to the company’s inability to meet its debt obligations.
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KidKraft joins a number of retailers and brands in other categories that have recently been filing for bankruptcy including, Rue21, Express, Joann’s, 99 Cent Only Stores, Sam Ash and others.
