Creditors Seek Liquidation of Knickerbocker
In a double blow to beleaguered L.L. Knickerbocker Co., creditors are trying to force the celebrity doll marketer into bankruptcy, and Nasdaq has delisted the company’s stock.
Three Taiwan manufacturers filed a petition to force the company into liquidation proceedings under Chapter 7 of the bankruptcy code.
The creditors--An Arch Associates Inc., Green Spring Co. and Prime Doll Development--said the Lake Forest company owes them nearly $1.3 million.
“The reason we’ve put this before the bankruptcy court is so the company is forced to come up with a plan to pay its creditors,” the creditors’ attorney, Margaret A. Glynn, said. “The business will continue operating for now. Whether or not the business is liquidated depends on the cooperation of Lou Knickerbocker.”
Chief executive Louis L. Knickerbocker could not be reached for comment, but the company’s attorney, Marc Winthrop, said it will not liquidate. “The company will continue to operate,” he said.
Knickerbocker also said Wednesday it had been notified by Nasdaq officials that its common stock had been delisted Tuesday after the market closed because it failed to meet minimum listing requirements of $1 a share.
The shares have traded below $1 since Feb. 8. In the first day of over-the-counter trading Wednesday, the shares slumped to 3 cents, a 52-week low, before closing at 6.5 cents, off 6 cents for the day. Volume totaled 1.5 million shares.
Knickerbocker’s stock has had a turbulent history. In 1995, it shot to $52 a share from $4 before a 5-for-1 stock split, a run-up that raised eyebrows. Last summer, flamboyant broker Rafi M. Khan was accused of manipulating the shares of Knickerbocker in 1995, helping fuel the sharp gains.
The company, which once had actress Farrah Fawcett on its board, has posted losses in 10 of its last 11 quarters. But spokeswoman Fran Daniels said Knickerbocker, which markets porcelain and vinyl dolls and teddy bears, is working to right itself.
“I think the company is operating better than it has for a couple of years,” she said. “Unfortunately, we do have a creditor situation to deal with and we will.”
News of the bankruptcy filing came as a surprise to the company when it was announced by the creditors’ attorney during an informal meeting Tuesday, Daniels said. The company had scheduled the meeting to update creditors on its performance in an effort to pave the way for paying its debts out of court, she said.
Winthrop, the company’s attorney, said Louis Knickerbocker himself “is trying to work things out with creditors. He’s guaranteed the company’s debt to the bank.”
Knickerbocker’s 11,000-square-foot home in Coto de Caza is on the market for $3.5 million. He has reportedly spent about $1 million remodeling the sprawling Mediterranean estate, which is situated on four acres and has a media room, library, walk-in safe and racquetball court.
Realtor John Evans said the house--originally priced at more than $4 million--has been on the market for more than two years. Knickerbocker intends to buy another house in Coto de Caza, the agent said.
Evans said he has selected two houses for Knickerbocker to consider that are in the $400,000 price range.
“He just wants to keep it real simple for the time being,” Evans said.
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Knickerbocker Knocked
L.L. Knickerbocker Co., which has recorded relatively flat sales and a string of unprofitable quarters, now must contend with a bankruptcy petition from three creditors. Sales and earnings in millions:
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1996 4th qtr. $23.2 $-0.10 1997 1st qtr. 13.4 -3.84 2nd qtr. 17.6 -0.56 3rd qtr. 14.1 -0.59 4th qtr. 23.1 .61 1998 1st qtr. 11.5 -2.58 2nd qtr. 13.4 -2.54 3rd qtr. 15.8 -1.69 4th qtr. 19.7 -24.73 1999 1st qtr. 9.5 -2.28 2nd qtr. 13.4 -1.09
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Source: Bloomberg News
