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Posted on 11/16/2004 4:37:44 PM PST by Born Conservative
CHESTERFIELD, Mich., Nov. 15 /PRNewswire/ -- Lionel LLC, the nation's number one model train manufacturer, today announced that it has filed a voluntary petition in the Bankruptcy Court of the Southern district of New York for protection under Chapter 11 of the U.S. Bankruptcy Code (1). The filing was prompted by a $40.8 million judgment against the company for the alleged misappropriation of a competitor's toy train designs by a subcontractor. Lionel's day-to-day operations will continue as usual, including meeting all merchandise shipping obligations customary for the holiday selling period and rolling out new products on schedule. The company remains dedicated to creating and manufacturing the quality product for which it has long been known.
Jerry Calabrese, the recently named CEO of Lionel, said, "The MTH judgment alone has forced us to take this action. Lionel is a sound company that enjoys healthy sales, growing demand for our products and the best brand and reputation in the business. Having said that, the size and weight of this judgment is just too much for what is essentially a small business to bear. Taking advantage of bankruptcy protection will not only allow us to pursue an eventual reversal of this unfair decision, it will enable us to create, manufacture and ship our products in our normal and usual way."
About Lionel LLC
Lionel LLC is one of the world's leading marketers of model trains and accessories. Established in 1900, the Lionel name is the most widely recognized brand in the toy train industry and one of the most recognized brands in America. Lionel has been at the center of every major innovation in toy train manufacturing and marketing since its inception.
(1) Chapter 11 of the U.S. Bankruptcy Code allows a company to continue to operate its business and manage its assets in the ordinary course of business. Congress enacted Chapter 11 to enable a debtor to preserve its going concern value and operations, as well as to provide its employees with jobs and to satisfy creditor claims based upon the value of the reorganized company.
I do believe that Lionel was bought by Neil Young some years ago. He has a son with Autism that is facinated by trains.
You're right. I think that in addition to the lawsuit, MTH has been kicking their butt; nicer looking trains, and the track was much easier to set up.
Funny, I thought Neil Young abandoned his wife Carrie Snodgrass and his autistic son. Snodgrass sued him for lack of child support. She gave up her acting career to raise the boy by herself. Who knows though.....
"...alleged misappropriation of a competitor's toy train designs by a subcontractor"
By a subcontracter? And Lionel has to pay? Talk about more scumbag lawyer and activist judge misapplication of the law and common sense.
Let's trash and bankrupt a company and fire everybody so they can all go on welfare just so a lawyer can be more of a millionaire without ever doing an HONEST days labor.
American Flyer?
Now there's a train?
At the risk of making fun of mental handicaps, I always thought Neil Young was the one with autism.
Very possible. Frankly, I don't keep up much on the personal lives of celebs. I'm an admitted pop culture illiterate. I'm pretty sure though that Young still has part ownership of the company.
If it was done on Lionel's dime, yes, it does.
Filing a Chapter 11 simply to protect your otherwise solvent company from having to file an appeal bond while pursuing an appeal from an adverse judgment will very likely be held to constitute an abuse of the bankruptcy system, which would result in the dismissal of Lionel's Chapter 11 filing and the assessment of terms against Lionel and its attorneys. Publicly admitting that that is exactly what you are doing is incredibly stupid.
I sure would like to be representing MTH right now.
BTTT
LVM
So, if I hire a gardner, and he goes down the street and steals someones property -- *I* and responsible for the theft?
Really stupid in my opinion -- only logical in the deviant minds of scumbag lawyers
Apparently it wasn't a calculated risk.
*I* and = *I* am
(just in case someone can't figure that one out - like lawyers)
I think you are reading it wrong, it is just bad English. The subcontractor's (MTH) designs were allegedly stolen by Lionel, MTH sued, and the court agreed. Lionel had been knocked for several years for their lack of innovation. They apparently tried to get over that by stealing designs and IP from MTH. What would you have done if you were on MTH's shoes?
Check: http://www.trains.com/Content/Dynamic/Articles/000/000/005/517vkoih.asp
Now THAT would change the meaning of that sentence entirely.
The sentence read that a subcontractor stole designs FROM MTH.
Damn! And I had such a fine rant going!
LVM
But they don't de-rail so easy.
If you paid the gardener for the time, yeah.
That's why you're supposed to supervise contractors.
Judge affirms $40.7 million award to MTH
A federal court judge has affirmed a $40.7 million award to MTH Electric Trains, bringing to an end the lawsuit between MTH and Lionel over the use of stolen toy train manufacturing plans.
In addition, the court permanently banned Lionel LLC and Korea Brass from ever using the disputed design drawings or tooling developed from those drawings in the future. Judge John Corbett O'Meara denied a request made by Lionel and Korea Brass for a directed verdict.
The orders, filed Nov. 1 in federal court in Detroit, Mich., bring the civil case to its conclusion, although Lionel has stated it will file an appeal.
MTH in 2000 accused Lionel and its South Korean manufacturing partner of using drawings that were stolen in South Korea to produce locomotives. The drawings, actually computer files, were for mechanical and electrical subassemblies.
In June 2004, after an 18-day trial, jurors sided with MTH and awarded it $40,775,745 in damages.
The drawings were stolen in 1998 or 1999 from Samhongsa, MTH's former South Korean manufacturing partner, and, according to the lawsuit, were discovered in the hands of a design firm that did subcontract work for Korea Brass. Four South Koreans were arrested by South Korean authorities and subsequently convicted in the case, according to the lawsuit.
Korea Brass and its representative in the United States, Yoo Chan Yang, were defendants along with Lionel in the case.
The court found that Lionel and Korea Brass misappropriated "trade secrets" for 20 pieces, listed in court documents as the:
Baby Hudson, Baby Pacific, Starter Set Hudson Jr., Scale C&O Allegheny, Scale Union Pacific Big Boy, Scale N&W Class A, Scale Lumber Shay, Scale PRR T-1, Scale Challenger, O Gauge Tinplate Hiawatha, Scale NYC Hudson, N&W Auxiliary Tender, UP Auxiliary Tender, Baby Challenger, Scale Dryfuss Hudson (sic.), Scale PRR S-2 Turbine, Scale PRR K-4, Baby 0-8-0, Scale Empire State Express, Baby Blue Comet, Tinplate 392E.
The locomotives designated Baby Hudson, Baby Pacific, Starter Set Hudson Jr., and Baby Challenger appear in Lionel's 2004, vol. 2 catalog.
http://www.trains.com/Content/Dynamic/Articles/000/000/005/517vkoih.asp
Just curious, how old are you?
Toy train ping.
More electro/mechanical aptitude was discovered and developed by putting the layout together and figuring out WHY it stopped dead in the middle of a track, HOW to fix it and then fixing it.
Train sets and barber shops ... sigh.
The "Quick" search only shows more recent threads.
But here's one I posted from last June (in the older "archive" search)
D.C.-area train maker wins $40.8 million against Lionel
BTW, thanks for the update.
But it's sad to see Lionel go belly up on this.
Maybe...why the Chapter 11.
Wasn't Lionel also being sued by Union Pacific for trademark infringements.
You're right; I guess I only did a quick search. Yes, it's sad to see Lionel go down like this, but they have evidently passed their prime. My son's first train was a Lionel, but after having to constantly fix the track when we ran the train, we switched to MTH, and have no regrets (MTH is superior by far, IMHO).
> Who ever heard of a three track train?
Not only are 3-rail electric systems still in common use
(such as many subways, usually using outside 3rd-rail),
3-rail electrified systems using a center 3rd/hot rail
are "prototypical" (as the rail modelling community puts it).
For example, from 1895 to 1902, the Old Colony line from
East Weymouth to Nantasket & Cohasset (Mass) was operated
using a center 3rd rail. (This line {excepting the
Nantasket branch} is presently being restored for diesel
commuter rail. If ever electrified, it will be catenary.)
When electric toy trains were being developed, there was
nothing particularly unusual about the Lionel 3-rail
O-gauge configuration.
And you can do a reverse loop without hesitation.
No, you are reading it wrong. A South Korean brass company that manufactured some of the Lionel Designs also manufactured for MTH... and someone mis-appropriated the MTH designs AT the Korean end. Lionel actually knew nothing of this until they published their catalog and MTH sued.
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In the hypothetical case presented, you would not be responsible. Example: a contractor you hired to put a roof on your house, leaves the property, breaks into your neighbor's home and steals jewelry. You would not be responsible for his crime or for reimbursing the neighbor's loss. IF, however, the contractor was acting as your agent (i.e. a cable installer who steals jewelry from the house while installing a customer's cable TV lines) and THEN committed the act, you could be responsible.
Didn't the flamboyant Roy Cohen once run the Lionel train company?
Yup, ran it right into the ground.
I used to work for:
IBM = International Business Machines.
actually no it is not.
the judgement would damage the company and thus they are entitled to use the laws.
The judgment is unsecured debt, it goes to the bottom of the creditor rankings.
I don't know what MTH stands for, but their website is http://www.mth-railking.com/
We all knew about the third rail in the subway, and Nantasket? The only way to get to Nantasket in my day was to hitch-hike or skip school with a guy that had a car.
Revere Beach OTOH could be reached by MTA (w/transfers).
Still ... American Flyer was the train to have in the 50's.
Are you a bankruptcy lawyer?
Notice they filed after the Christmas Season gear up/stock up time.
We're one week away from the busiest shopping day of the year and I'm sure Lionel is ready to ship their goods.
> Wow ... there's a bit of history I never knew.
Here's a site with some:
http://www.959watd.com/greenbush/GreenbushHistory.asp
> The only way to get to Nantasket in my day was to hitch-hike ...
If you look on USGS 7.5 minute maps, or the MBTA
environmental impact drawings for the proposed
"Nantasket Junction" station at Summer St, you can
still see hints of the where the grade turned off
to the north towards Nantasket.
P23 of the Hingham document found by drilling down from:
http://www.mbta.com/projects_underway/greenbush.asp#environ
It was called "Junction" because two lines joined
there. Curious that the MBTA chose to retain that
name. Gotta wonder ...
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I hate to admit this, but Microsoft has the best model trains.