While news of the imminent collapse of Toys ‘R Us continues to dominate national news headlines, another more local, but no less important story, is shaking fans and collectors of 1:6 scale RC aircraft and vehicles to their very core. We’re talking again, of course, about the upcoming demise of Hobbico, (formerly) one of the RC hobby’s leading manufacturers and distributors. Hobbico’s troubles hit very “close to home” around here. That’s because they’re headquartered just a few miles up the road from our offices here in central Illinois, Champaign-Urbana (C-U) to be exact. As such, we see and hear news that is related to Hobbico probably a little more often than the rest of the country, but the impending loss of ANY 1:6 scale product manufacturer—and employer—will undoubtedly send economic “ripple effects” outside of our local community, into the worldwide “toy economy” as well. Today’s updates come to us from News-Gazette reporter, Ben Zigterman, who provides the following intel on the company’s upcoming liquidation auction:
“Having filed for bankruptcy protection in January, Hobbico plans to auction its assets March 26 in Chicago in a bid to find a buyer. The hobby-product distributor, which employs more than 300 people in the county, placed ads Wednesday in The News-Gazette and USA Today with notices of the auction, as required by the bankruptcy process. In the past couple days, former employees also told The News-Gazette they had received notices about the auction, which will be followed by a hearing on March 28. When Hobbico filed for Chapter 11 bankruptcy protection, it said it had added too much debt and faced ‘an increasingly competitive industry, market headwinds and a series of one-off events with key suppliers.’ It also said that it had an estimated 200 to 999 creditors, $10 million to $50 million in assets, and $100 million to $500 million in liabilities. In recent court documents, Hobbico also indicated it had $114 million in revenue in 2017, down from $175 million in 2016. Hobbico asked for a minimum bid for all the assets at $38 million, or less than that for different parts of the business, according to court documents.”
Bottom Line: This latest, saddest phase of Hobbico’s Chapter 11 bankruptcy saga parallels the similar travails currently going on at Toys ‘R Us, which is unsettling to many, to say the least. The March 26 auction up in Chicago will completely hand the reins of Hobbico over to whomever (or whatever) “new ownership” may step in, and those new owners must then decide the fates of hundreds of hard-working employees and what—if anything—can (and will) be done to keep the company afloat.