4Kids Files Shareholders' Report on Yu-Gi-Oh! Lawsuit
posted on 2011-03-31 13:07 EDT by Gia Manry
On Wednesday, the North American media distributor 4Kids Entertainment filed a Form 8-K report to the United States Securities and Exchange Commission (SEC) to address TV Tokyo and Nihon Ad Systems' (NAS') recent lawsuit against 4Kids and their letter of termination for 4Kids' Yu-Gi-Oh! licensing. The two Japanese licensors accused 4Kids of underpaying them and of conspiring with anime distributor Funimation to defraud them. The lawsuit cited information from a recent audit conducted on 4Kids' Yu-Gi-Oh! business. As a publicly traded company, 4Kids is required to file a Form 8-K to inform its shareholders of major events.
In the report, 4Kids stated that on March 27, it informed the two licensors that their letter of termination "did not comply with the 10 business day notice and cure provision" written in the agreement, and states that it has rejected the termination letter "as wrongful and devoid of any factual and legal basis." 4Kids further reported that the licensors reiterated their intent to terminate on March 30, and that the American company intends to "vigorously oppose" said termination.
The report also said that 4Kids received a request for payment from TV Tokyo and NAS on March 4. 4Kids said that it made a US$1 million payment "as a show of good faith" in order to earn a March 18 meeting to resolve the claims in the audit. However, the licensors moved forward with the lawsuit filed on March 24.
While 4Kids maintained throughout the document that the termination of its Yu-Gi-Oh! license is invalid, it acknowledges that should the lawsuit move forward and the termination be found valid, the American company will do whatever is necessary to maintain its business, "including the potential filing" of a Chapter 11 bankruptcy petition, and that it will seek to recover damages to its business caused by the licensors' actions.
The federal government's court document system shows no new filings on the case since ANN's previous report.
Thanks to dynasore for the news tip.