NEW YORK, May 5 (Reuters) – Legendary model train maker Lionel LLC has emerged from bankruptcy protection, the company's Web site and court documents show, allowing it to focus on expanding its pop-culture and high-end collector trains.
“After more than seven long years of legal warfare, a brutal financial restructuring, and a lot of corporate soul searching, Lionel has fully emerged from bankruptcy,” Chief Executive Jerry Calabrese wrote in a note on the company's Web site, www.lionel.com.
Lionel, which has been in business since 1900, sought bankruptcy protection in 2004 after a trade-secrets dispute with MTH Electric Trains.
“Lionel's emergence from bankruptcy has been achieved by paying all of its creditors all of the money they were owed, in addition to interest for all the time during which the company was in bankruptcy,” Calabrese wrote.
Rock musician Neil Young, who once had a 20-percent stake in Lionel, “Continues to be involved with a meaningful minority stake,” Calabrese said in an interview, but he declined to give further details.
Young helped develop the company's Legacy model train operating system.
“He's singularly responsible for the first operating system for trains and continues to be very seriously involved in the further developments,” Calabrese said in the interview.
Lionel, which sells its model trains at big-box retailers like Target Corp (TGT.N: Quote, Profile, Research), Macy's Inc (M.N: Quote, Profile, Research) and hobby shops, and MTH settled their dispute last October, paving the way for Lionel to obtain financing to exit bankruptcy.
Documents filed with the U.S. bankruptcy court of the Southern district of New York show that Lionel emerged from bankruptcy on May 1.
The company can now focus on growth, Calabrese told Reuters.
“Post bankruptcy … all attention and resources are devoted to expanding the foothold we've already achieved in modern popular culture mass sales and gives us the chance to redouble our efforts in our core hobby business,” he said.
The company's pop-culture unit is devoted to train sets with themes, such as Harry Potter trains, while its high-end products include sets most avidly acquired by collectors.
Calabrese wrote on the Web site that in addition to Young, pre-bankruptcy owners Luella Davis and Dick Kughn would remain involved with the company, along with Guggenheim Investment Management LLC, which provided much of the new financing for the company's exit from bankruptcy. (Reporting by Chelsea Emery, Editing by Toni Reinhold)