Lionel going out of business rumors.......

[Anonymous]

well, the first tidbit came in this email from Athearn concerning their HO scale 4-6-6-4 challenger locomotives.

QUOTE: Second, we are REDUCING the retail price of these great behemoths! We have received information that another maker of Challengers is again leaving the HO marketplace, and will be liquidating their remaining Challengers. We want to make certain that our faithful dealers and consumers don't get fooled by a large price differential.

Lionel and Rivarossi are the only ones making challengers in HO, and Lionel is the only real competator to the Athearn model.

now there is someone on the Atlas HO forum stating that he has a source that says Lionel is bankrupt and going out of business......

this would be pretty bad if true. has anyone heard any more information or any credible rumors on this??

[ben10ben]

In his visit to the Train Station in New Jersey today, Lionel's new CEO said that they currently have no plans to close, and has every intention of moving forward. Lionel might file bankruptcy, but this would only be as a precaution to prevent MTH from obtaining Lionel's assets should the lawsuit go against them. This is fact, as a number of people in attendence today have confirmed. http://ogaugerr.infopop.cc/eve/ubb.x?a=tpc&s=63160042&f=57660482&m=6761006641

[nblum]

There are two main types of bankruptcy, named after the section of the federal code that applies. Chapter 11 is reorganization under court protection and supervision, which enables a company to continue to do business without being persecuted by its creditors. Chapter 7 is liquidation. The former is much more likely than the latter if Lionel fails to reduce the bizarre award in the recent legal shenanigans. With any luck or justice, neither will be necessary.

[daan]

Let's talk about Rivarossi for instance. Rivarossi was taken over by Lima in the mid 90's and Lima doesn't make a good profit now either. Arnold, another factory which was in the hands of Lima, has closed down already.
My guess it would be rivarossi which stops making challengers and closes down, or stops making american models, so shutting down the american part.
Lionel would be the same as maerklin in europe having to shut down.. not emaginable.

[Big_Boy_4005]

I'm not too worried, by all this. Lionel is too valuable a name to lose, after all it has been around for over 100 years. It isn't uncommon for individuals or companies facing large judgements to do a bankruptcy to clear the decks. This may be a good strategy in the end, resulting in a leaner and meaner Lionel. It sounds like the days of the bloated catalogs may be over. That might not be a bad thing either.

Thanks for the link Ben.

[Anonymous]

Remember Studebaker and Oldsmobile were around for 100 years too.

[Big_Boy_4005]

QUOTE: Originally posted by dontrainman

Remember Studebaker and Oldsmobile were around for 100 years too.

I'm not sure those two names count for 100 years, but point taken.

Actually the original Lionel corporation went bankrupt a couple of times, though they weren't making trains at the time. Those were post 1970, after they had sold the train business to General Mills. I guess they finally gave up the ghost a few years ago.

The train business has even fallen on some hard times, and with Mr. Cowen Sr himself at the helm. Mickey Mouse hand car anyone?[;)]

Lionel just needs a good belch once in a while, let some of the air out.[:0][swg]

[dougdagrump]

Lionel closing, yea right. I guess that means that Ralph Nader will be our next president. [(-D][(-D][(-D]

[ben10ben]

Yep, the Lionel coporation doesn't even exist anymore. It official closed about the time General Mills(Model Plastics Corporation, or MPC) started production of Lionel. When Richard Kughn bought the Lionel name from General Mills(Fundimensions) in 1986, he formed Lionel Trains Incorporated, or LTI. When Wellsprings bought it out from Richard Kughn in 1996, they forum Lionel Limited Liability Corporation(LLC).

Someone, either here or on OGR, also explained that Wellsprings probably actually has Lionel set up as two different corporations. One makes the trains, and the other just owns the name. The one that makes the trains licenses the name to put on their trains. It's set up this way so that, in the event of something like the Lionel-MTH lawsuit, MTH could aquire all of Lionel's assets, but he there would be no way that he could aquire the thing that he's really after, the Lionel name.

[Big_Boy_4005]

QUOTE: Originally posted by ben10ben

Yep, the Lionel coporation doesn't even exist anymore. It official closed about the time General Mills(Model Plastics Corporation, or MPC) started production of Lionel. When Richard Kughn bought the Lionel name from General Mills(Fundimensions) in 1986, he formed Lionel Trains Incorporated, or LTI. When Wellsprings bought it out from Richard Kughn in 1996, they forum Lionel Limited Liability Corporation(LLC).

Someone, either here or on OGR, also explained that Wellsprings probably actually has Lionel set up as two different corporations. One makes the trains, and the other just owns the name. The one that makes the trains licenses the name to put on their trains. It's set up this way so that, in the event of something like the Lionel-MTH lawsuit, MTH could aquire all of Lionel's assets, but he there would be no way that he could aquire the thing that he's really after, the Lionel name.

No Ben, I believe you are mistaken. The Lionel Corporation of New York continued on long after 1970 when they spun the train business off to General Mills. One of their ventures that did not pan out was called Lionel Leisure World, a kind of Toys R Us concept. I believe they actually carried the MPC trains.

Lionel was involved in a lot of obscure businesses well beyond 1970. Think about it, they still had a lot of assets, and got a lot of money from General Mills when the train business was sold. Bankruptcies followed as different parts of the coropration crumbled. The final one was not that long ago.

You need to brush up on your history young man.[;)] By the way, the P in MPC stands for Products, not plastics. I was alive and playing with those trains then, and eventually working in a hobby store in Denver in 1980. You were, I believe, not born yet. Sorry, live and learn.

All this talk has made me curious as to the specific details of the Lionel Corporation of New York. Thank God for the internet.

The LLC thing prevents MTH from having it's judgement attached to any of the owners personal assets. The corporation is still subject to the judgement.

[Big_Boy_4005]

Here Ben, my turn to give you a link.

http://users.rcn.com/ed.ma.ultranet/lionel.html

About a third of the way down the page you will find what I was talking about, but I don't think it ended there. There was still more obscure stuff after that. I'll keep looking.[swg]

Here, this one is even better, and brings it up to 1994.

http://www.webster-dictionary.org/definition/Lionel%20Corporation

[Bob Keller]

Let's not go down this road....

Lionel isn't going out of business.

The original Lionel Corp. folded its tent for the last time sometime after I started with CTT in 1996. We put a small item in product news to clarify it wasn't the Michigan train co.

Even if Lionel's financial situation was in the basement, I doubt if they would file for liquidation, income based reorganization (A time honored event in railroading, prototype and miniature) would be their choice. The investors don't want to lose their investment.

As noted elsewhere, Rivarossi, owned by Lima, is now owned by Hornby. So the brand names, tooling, etc., just moved from Italy to Her Majesty's Train Guys. None of the Lima brands are expected to die.

[Anonymous]

Ogaugeoverlord,
Those Rivarossi dies are going to China after a BRIEF stopover in Jolly old England.

[Big_Boy_4005]

QUOTE: Originally posted by johnblair

Ogaugeoverlord,
Those Rivarossi dies are going to China after a BRIEF stopover in Jolly old England.

John, it sounds like even European labor is getting too expensive.

[ben10ben]

Elliot,
I appoligize for the misinformation.

Thanks. I didn't realize that the Lionel corporation had lasted for that long after they stopped making trains.

[Big_Boy_4005]

Yes Bob, I think that the members here are pretty much in agreement that in spite of a possible bankruptcy filing, Lionel will continue to make trains, both short and long term. Your perspective as an industry "insider" carries much more weight than the opinions of hobbyists.

Nightcrawler was asking specificly about HO products from Lionel. I would have to think that that part of the business would have a greater chance to fall victim in the event of a reorganization. History has shown Lionel moving in and out of HO almost every 20 years. This may be another excuse for another exit. It would be unfortunate, because it sounded like the HO guys liked the products. Any thoughts or comments???

Thanks for the back up on the Lionel Coropration of New York. I have always called them that to distingui***hem from the maker of trains post 1969. All of the material that I could find pointed to a 1994 final, but I could swear that they went on even longer. You mentioned 1996 as a landmark date in your memory as the earliest possibility. I agree, but I can't remember when.[%-)]

[Big_Boy_4005]

QUOTE: Originally posted by ben10ben

Elliot,
I appoligize for the misinformation.

Thanks. I didn't realize that the Lionel corporation had lasted for that long after they stopped making trains.

No need to apologize Ben, we ALL come to the forums to learn, even me. The history of Lionel is a very interesting side topic of study. It goes deeper than just the trains, though to us that is the fun part.[swg]

I learned something in my search for that date. I had no idea that General Mills only paid $150,000 for all the tools dies. What a bargain by today's standards.

[Anonymous]

Well I'm not worried about Lionel going out of business!

Lionel will always be there.... just like the Santa Fe.

Santa Fe Kent

There is no such thing as a BNSF.

[Anonymous]

Can someone please tell me more about the lawsuit that MTH has against Lionel? Thank you! [:)]


Mary

[Anonymous]

Train Chick wrote:"Can someone please tell me more about the lawsuit that MTH has against Lionel? Thank you! [:)]"

Look in the archives.

[daan]

QUOTE: Originally posted by Big_Boy_4005

QUOTE: Originally posted by johnblair

Ogaugeoverlord,
Those Rivarossi dies are going to China after a BRIEF stopover in Jolly old England.

John, it sounds like even European labor is getting too expensive.

Everything is too expensive when it comes to making money[;)]
Nope, Lima bought rivarossi some years ago when it was facing bankrupcy also. Lima now has a hard time because the market in h0 trains is overcrowded in Europe. Rivarossi is not a big trainfactory anymore and has only some models in their program. It is more like a re-orginasation; Lima is getting focussed on the things which make a profit. Arnold was ruled over by Roco, Fleischmann and minitrix, now Lima has to make their own future more stable by getting another compititor (though from their own house) away from the market. Fleischmann, Roco, Maerklin, Trix and Lima are the big ones, Trix has been swallowed by Maerklin and is financially strong now. Lima is now getting rid of the non-profit parts of their empire..
The profit making issues of Rivarossi are being sold on with Lima on the bottom..