TORONTO - Venerable toy maker Irwin Toy Ltd. has obtained bankruptcy protection from its creditors and is cutting almost half its staff as part of a major restructuring, the company announced Monday.

Irwin said it was granted an order by the Ontario Superior Court of Justice under the Companies' Creditors Arrangement Act. The busines is also seeking protection from creditors in the United States.

Irwin said it was laying off 135 of its 308 employees and was talking to potential buyers with a view to selling the company before Christmas.

Irwin executives said the company missed key shipping dates to U.S. customers this summer because they weren't able to churn out enough product and lost $16 million US in sales because of that.

"We are taking this course of action to allow the company to address its challenges and protect the interests of our employees and creditors," Jean-Rene Halde, the president and CEO of Irwin said.

"There have already been serious expressions of interest by parties interested in purchasing segments of Irwin's business. If consummated, these sales could form the basis of a company restructuring or a sale of advantage to creditors and will hopefully result in saving as many jobs as possible," Halde said.

"Unfortunately, the changes being announced today have resulted in many of our employees leaving the company. While this was a necessary business decision, I deeply regret its effect on employees, especially at this time of year," he added.

Irwin Toy was taken private in March 2001 by Livgroup, a privately-held company owned by Richard Ivey and Halde., in an all-cash deal worth $55 million.

Founded in 1926, Irwin makes and distributes such children's toys as Slinky, Etch-a-Sketch, Caillou and Dragon Ball Z .

Follow up:

Irwin Toy’s filing for bankruptcy will indeed be a “hiccup” in the production of Dragonball toys, but it should hopefully be a small one.

According to sources at FUNimation, Irwin’s bankruptcy is not a reflection of the performance of the DBZ brand. The brand itself continues to be strong in both sales and overall popularity.

FUNimation is already in talks with 4 major toy companies to take up the distribution reins for IF Labs. The company that picks up the distribution for the IF Labs figures will most probably acquire all existing molds, designs, etc. as part of the deal. The transition from Irwin as a distributor to a new company should be fairly seamless from a consumer point of view. The new distributor should be announced within a week.

It is unknown at this time if the new IF Labs distributor will also continue the current Irwin Dragonball lines, or if they will go to a separate company. The rights to those lines and figures (and all associated molds, etc) will probably be subject to Canadian bankruptcy court proceedings. I would speculate that if the new IF Labs distributor chooses not to pursue the Irwin lines, then someone else will. However, two competing companies with the same license would definitely spell trouble for the one or the other.

One thing to keep in mind, however, is that the toys are just that, toys. Any toy delays or cancellations resulting from the bankruptcy are minor concerns, compared to the concerns of the 135 people who lost their jobs. Don’t let problems with toys overshadow your concerns for fellow human beings.

Source: Dan Hancock of Dragonballtoys.com