Worlds of Wonder Chief Forced Out by Firm’s Creditors

The magic ran out Thursday for Worlds of Wonder Chairman and Chief Executive Donald D. Kingsborough, when bankruptcy creditors forced him to leave the toy company he founded two years ago and drove to high-flying success with the help of a talking bear named Teddy Ruxpin.

A U.S. Bankruptcy Court judge in Oakland approved a reorganization plan ousting Kingsborough that was put forward by the banks and unsecured creditors to whom Worlds of Wonder owed $260 million when the toy company filed for Chapter 11 bankruptcy protection in December.

Fremont, Calif.-based Worlds of Wonder had a dazzling debut three Christmases ago when it introduced its lone product, Teddy Ruxpin, the first toy to combine recorded sound and animation to create the illusion of speech. It garnered $93 million in sales that year, the most ever for a new toy.

The firm sold stock to the public early in 1986 and then worked wonders again that Christmas, introducing Lazer Tag, which became the year’s best-selling toy.

Worlds of Wonder invested heavily in developing other innovative toys, but proved unable to match the unparalleled success of its early products. Instead, it plowed deeply into debt as other companies entered the competition in the high-tech toy market the firm had created.

Kingsborough, a former executive at Atari, another toy firm that took a roller coaster ride from profit to disaster and back, said he was hopeful that World of Wonder’s fortunes could revive.

“I believe that Worlds of Wonder Inc. is entering a new era which will inspire retailer and vendor confidence and active participation,” he said in a written statement. “Now the company can get on with what it does best--creating and marketing innovative toys with exceptional play value.”

As part of the reorganization plan, Stephen J. Hopkins, a New Canaan, Conn., management consultant, will become chief executive of Worlds of Wonder. The company said it expected to hire as consultants two former top executives of Hawthorne-based Mattel--Ray Ferris, a former chief financial officer, and Loren Hildebrand, former executive vice president of sales and distribution.

Worlds of Wonder announced early last month that it lost $129.3 million in the last quarter of 1987, due to slumping sales. The firm recently missed $3.6 million in interest payments to bondholders. Its stock, which soared to $29 a share soon after the company went public, closed at $1.31 on Thursday in over-the-counter trading, up 12.5 cents.

Rick Anguilla, editor of Toy & Hobby World, an industry publication in New York, said Thursday that it appeared the company’s creditors saw hope for reviving Worlds of Wonder, despite the depths of its economic woes.

“There’s no question there are creative people at the company, and no question they had some very popular toys,” he said. “The problem is that they owe people a lot of money.”

One of those creditors greeted word of Kingsborough’s departure with satisfaction.

“That’s quite positive news,” said Fred Goldberg, president of the San Francisco office of Chiat/Day, the Los Angeles-based advertising firm that reportedly is owed more than $3 million by Worlds of Wonder. “I only hope that will help us recover all the money they owe us.”