KidKraft: MidOcean-Backed Toy Maker Sold to Backyard Products in Prepack

KidKraft, Inc., a Farmers Branch, Texas toy manufacturer founded in 1968, sells wood-based play products such as swing sets, playhouses, and dollhouses through roughly 2,800 retailers in more than 90 countries. Farmers Branch, Texas and the company history in 1968 are part of the local record, while the global retail footprint and category breadth were highlighted in the filing announcement and industry coverage describing KidKraft's product focus in wood-based play.

On May 10, 2024, KidKraft and 10 affiliates filed voluntary prepackaged chapter 11 petitions in the U.S. Bankruptcy Court for the Northern District of Texas, a chapter 11 filing centered on a sale to Backyard Products, LLC. The filing was backed by a restructuring support agreement and a DIP facility of up to $10.5 million from 1903 Partners, LLC, a Gordon Brothers affiliate, and the company said it expected the transaction to close within about two months. The filing announcement also said the European, Pacific, and Asian operations were outside the U.S. cases and that Canadian entities pursued a separate CCAA process.

Debtor(s)	KidKraft, Inc. (10 affiliated debtors)
Court	U.S. Bankruptcy Court, Northern District of Texas (Dallas Division)
Case Number	24-80045-mvl11
Judge	Hon. Michelle V. Larson
Petition Date	May 10, 2024
Confirmation Date	June 24, 2024
Sale Order Date	June 24, 2024
Sale Closing	July 2024
Plan Type	Prepackaged chapter 11 with section 363 sale
Estimated Assets	$100 million to $500 million
Estimated Liabilities	$100 million to $500 million
Total Funded Debt	Approximately $151.9 million
DIP Facility	$10.5 million new money delayed draw plus about $23.3 million roll-up; lender 1903 Partners, LLC; agent GB Funding, LLC
Buyer	Backyard Products, LLC

Restructuring Path and Case Milestones

KidKraft entered chapter 11 with a prepackaged Chapter 11 Plan and Disclosure Statement filed on the petition date, so the case proceeded on an accelerated track from the start. The public announcement framed the filing as a transaction to complete a sale to Backyard Products and to preserve operations during the handoff, with a target timeline of about two months from filing to closing. That structure is consistent with a prepackaged plan that uses the bankruptcy process to clear liens, assign contracts, and distribute sale proceeds quickly while funding operations with DIP financing.

Prepetition support. The restructuring support agreement was signed by the first lien secured lender, the majority shareholder MidOcean Partners, and the stalking horse bidder Backyard Products. The agreement locked in the transaction framework for a sale and plan support before the filing, which is typical in a prepackaged sale case and helps explain the short confirmation timeline.

Case scope. The voluntary petition listed assets and liabilities each in the $100 million to $500 million range and covered 11 total debtors under joint administration. The lead case was KidKraft, Inc., with affiliated entities included in the consolidated group. This structure allowed the court to manage a multi-entity sale process while keeping the focus on the U.S. operating business that was being sold to Backyard Products.

Petition-to-confirmation cadence. The court entered an Interim DIP Order within days of the filing, then confirmed the plan and approved the sale on June 24, 2024. Post-confirmation modifications to the plan were filed in early July. The timing met the milestone framework in the DIP motion, which tied final funding to confirmation and sale orders.

Post-confirmation status. On December 30, 2025, the court entered a Final Decree closing the chapter 11 cases of the consolidated non-lead debtors. The lead case for KidKraft, Inc. remained open pending further order of the court, reflecting the wind-down structure that continued to administer remaining matters after the sale.

Business Overview and Product Footprint

KidKraft is known for wood-based play products, with a focus on backyard and indoor play categories that include swing sets, playhouses, and dollhouses. Industry coverage described the brand as an established player in the toy and backyard products categories, and its product lineup has been a consistent part of its positioning in the marketplace. The company said its products were sold through roughly 2,800 retailers in more than 90 countries, which reflects a distribution model that depends on large retail partners and seasonal demand cycles.

Product categories. KidKraft's portfolio is centered on wood-based, durable play items that compete on design, safety, and brand reputation rather than commodity pricing. Its categories align with the retail channels that emphasize large-format play items and outdoor seasonal demand.

Retail and geographic reach. The company stated that it sells through about 2,800 retailers and reaches customers in more than 90 countries, a scale that requires a mix of large U.S. retail partners and international distribution agreements. The public filing announcement emphasized that the European, Pacific, and Asian operations were not part of the U.S. chapter 11 cases, while the Canadian affiliates pursued a CCAA process. That division of jurisdiction kept the U.S. case focused on the core North American operating footprint and the sale transaction to Backyard Products.

Retail concentration and creditor exposure. Local reporting identified Walmart as the largest creditor with a $5.32 million claim, underscoring the company's reliance on big-box retail partners. The same coverage reported that MidOcean Partners held a $5.0 million unsecured note, positioning the sponsor as both owner and creditor during the restructuring.

Buyer profile. Backyard Products, LLC was described as the nation's largest maker of backyard sheds and playsets, with operations in Ann Arbor, Michigan and a focus on outdoor structures. Industry coverage also highlighted Backyard Products as an established platform that operates multiple outdoor brands, a profile that fits KidKraft's wood-based playset portfolio and suggests product and distribution overlap.

Ownership, Capital Structure, and Liquidity Constraints

KidKraft has been owned by MidOcean Partners since 2015, and leadership of the company transitioned to CEO Geoff Walker in 2019 after his career at Mattel. The ownership profile matters because the sponsor was also a creditor, holding a subordinated unsecured note and participating in the restructuring support agreement for the sale to Backyard Products. That dual role as sponsor and creditor is common in sponsor-owned distressed situations, particularly when a quick sale is required to address a debt maturity wall.

Debt maturities and refinancing constraints. Local coverage reported that KidKraft was unable to refinance debt that came due in June 2023. The company engaged Robert W. Baird & Co. to explore strategic alternatives and contacted approximately 100 potential buyers, but those discussions did not produce a viable refinancing or standalone recapitalization. The lack of refinancing options set the stage for a prepackaged sale solution supported by the lender and sponsor.

Liquidity pressure timeline. Baird's transaction summary said the firm was engaged in late 2023 to evaluate strategic alternatives and that the process led to a recapitalization with Gordon Brothers and a sale through chapter 11. The marketing effort was broad, but the company still needed a court-supervised sale to complete a transaction quickly. That path aligns with the reported inability to refinance the 2023 maturity and the need to resolve covenant pressure with secured lenders.

Advisors and case roles. The filing announcement identified the debtor's counsel as Vinson & Elkins LLP, with Sierra Constellation Partners as financial advisor and Robert W. Baird & Co. as investment banker. Those roles reflect a standard sponsor-backed sale case, with restructuring advisors handling liquidity and cash management while an investment banker runs the marketing and sale process.

Drivers of Distress and Industry Backdrop

KidKraft's financial stress developed during a post-pandemic normalization period when demand for at-home and backyard products cooled. Management and reporting pointed to demand softening, ongoing supply chain disruptions, and inflationary pressures on costs and consumer spending. Industry data also showed that toy sales declined 8% in 2023, a negative backdrop for a company heavily exposed to discretionary consumer spending and seasonal retail cycles.

Consumer demand normalization. The pandemic period lifted demand for home-based entertainment and play products, but that trend reversed as consumers shifted spending back toward services and experiences. Retail coverage cited demand softening and inflationary pressures as constraints on KidKraft's sales and margins.

Supply chain and cost pressures. The company cited supply chain disruptions that extended into 2023, which can be especially costly for wood-based products that rely on international sourcing, freight capacity, and production scheduling. Inflation compounded those challenges by raising input costs and freight expenses while retailers resisted price increases.

Industrywide headwinds. Retail Dive reported an 8% decline in U.S. toy sales in 2023 based on Circana data, highlighting a macro demand decline that affected the broader sector. This industry context helps frame the challenges faced by a mid-sized toy manufacturer with significant exposure to big-box retail customers.

DIP Financing and Budget Controls

The DIP facility provided working capital to fund the business through the sale process and to support manufacturing, distribution, and employee wages. The facility was structured as a delayed-draw new money commitment plus a roll-up of prepetition rescue financing, and it came with a set of milestones that aligned financing availability with court approval of the sale and plan.

Facility structure. The DIP Motion provided $10.5 million of new money commitments, with $4.0 million available initially and an additional $6.5 million available after entry of the final order. The facility also rolled up approximately $23.3 million of prepetition rescue financing. The lender was 1903 Partners, LLC and the agent was GB Funding, LLC. Pricing was set at Adjusted Term SOFR plus 8.50%, with a 2% origination fee, a 2% exit fee, and a $7,500 weekly administrative fee.

Roll-up mechanics and adequate protection. The roll-up converted roughly $23.3 million of prepetition rescue financing into DIP obligations once the final order was entered, giving the lender a senior, court-approved position. The financing also provided superpriority claims and liens, while prepetition secured parties received replacement liens and other adequate protection, subject to customary carve-outs. Those protections are common in DIP structures where existing lenders provide new money and require priority treatment to fund the case.

Budget and variance tests. The DIP budget covered a nine-week period with rolling variance tests that allowed 15% variance for disbursements, 20% variance for receipts, and 15% variance for professional fees, as set out in the Final DIP Order. Those guardrails are typical in lender-controlled DIP facilities and provided a monitoring framework for liquidity during the accelerated sale process.

Sale Process and Purchase Agreement

KidKraft pursued a section 363 sale anchored by Backyard Products, LLC as the stalking horse bidder. The sale structure allowed the company to transfer assets free and clear of liens and to assign executory contracts in a court-supervised process, while the plan captured and distributed sale proceeds to creditors. This approach is common in sponsor-backed cases where a going-concern sale is the best available path and lender support is secured through a prepackaged plan.

Stalking horse protections. The Disclosure Statement stated that the purchase agreement included a break-up fee of approximately $1.18 million and expense reimbursement up to $1.0 million. These protections were intended to secure the buyer's commitment while still permitting a competitive process if higher bids emerged.

Sale consideration. Local reporting said the sale price was at least $39 million. That figure provided the minimum consideration underpinning the plan distributions and was aligned with the accelerated sale timeline targeted in the filing announcement. Baird later reported that the sale closed in July 2024.

Sale order findings. The Sale Order approved the purchase agreement, authorized the sale free and clear under section 363(f), and entered a good-faith purchaser finding. The order also authorized assumption and assignment of executory contracts, with the buyer assuming only the liabilities tied to assigned contracts. Those elements are central to a quick-sale strategy because they allow assets to transfer without the debt overhang and clarify which obligations transfer with the business.

Contract transfer mechanics. The assumption and assignment provisions in the sale order gave the buyer a path to take essential contracts and leases needed to operate the business after closing. At the same time, non-assumed contracts and any liabilities not expressly assumed remained with the estate. This allocation of obligations is typical in a section 363 transaction and helps explain why a prepackaged sale can move quickly once the court enters a final order. For counterparties, the process focuses on cure amounts, assignment approvals, and the identification of which agreements are transferred to the buyer versus retained in the wind-down estate.

Plan Treatment, Distributions, and Post-Confirmation Structure

The confirmed plan implemented the sale transaction and distributed proceeds through a wind-down structure. A Wind Down Estate and GUC Trust were created on the effective date, with a Wind Down Administrator and GUC Trustee appointed through the plan supplement. Directors and officers ceased to serve on the effective date, signaling the transition from an operating company to a liquidating structure.

Class treatment. The Confirmed Plan classified claims into priority, secured, unsecured, and equity categories. Priority and other secured claims were unimpaired and slated for full payment, while general unsecured claims were impaired and received no recovery. The prepetition secured party claims were the only voting class and received the remaining distributable value after higher-priority obligations and DIP claims.

Voting outcome. The Confirmation Order reported that the voting class (Class 3) accepted the plan 100% in number and amount. Unsecured creditors did not receive a distribution under the plan, which is consistent with a sale-based case where proceeds are absorbed by DIP and secured claims.

Post-confirmation modifications. The docket reflects post-confirmation plan modifications filed in early July 2024 after the June 24 confirmation order. Those filings show that plan implementation continued after confirmation as the sale closed and the wind-down structure took effect.

Post-confirmation administration. The plan created a Wind Down Estate and a GUC Trust to administer remaining assets and claims. This structure allows a small team to manage residual litigation, claims reconciliation, and final distributions without continuing the full operating enterprise.

Releases and settlements. The Confirmation Order approved releases and exculpation provisions and adopted a global settlement framework. A GUC settlement opt-in form was approved, indicating that general unsecured creditors were given a mechanism to opt in to a negotiated settlement structure even though their recovery was scheduled at zero under the plan. These provisions are typical in prepackaged cases where support from key stakeholders is secured before the filing.

Final decree and remaining case. On December 30, 2025, the court entered a Final Decree closing the chapter 11 cases of the consolidated non-lead debtors. The lead case for KidKraft, Inc. remained open pending further order, which is typical when a wind-down administrator continues to resolve claims, pursue recoveries, or complete administrative tasks.

Frequently Asked Questions

What is KidKraft?

KidKraft is a Farmers Branch, Texas-based toy company founded in 1968 that makes wood-based play products such as swing sets, playhouses, and dollhouses. It sells through roughly 2,800 retailers in more than 90 countries.

Why did KidKraft file for bankruptcy?

KidKraft cited demand softening after the pandemic, supply chain disruptions into 2023, and inflationary pressures that squeezed margins. The company was unable to refinance debt that matured in June 2023, and a broad marketing process did not produce a standalone solution.

Who owned KidKraft before the filing?

MidOcean Partners acquired KidKraft in 2015 and remained the majority shareholder through the chapter 11 process. The sponsor also held a subordinated unsecured note and supported the restructuring support agreement.

How much debt did KidKraft have before chapter 11?

The company reported approximately $151.9 million of funded debt, including a $63.2 million first-lien revolver, an $81.7 million first-lien term loan, and a $5.0 million subordinated unsecured note held by MidOcean Partners.

What DIP financing did KidKraft receive?

The DIP facility provided $10.5 million of new money commitments plus a roll-up of about $23.3 million of prepetition rescue financing. The lender was 1903 Partners, LLC and the agent was GB Funding, LLC, with pricing set at Adjusted Term SOFR plus 8.50% and standard fees.

Who bought KidKraft?

Backyard Products, LLC purchased substantially all U.S. and Canadian assets for at least $39 million and was approved as the stalking horse and final buyer in the sale order. The buyer is the nation's largest maker of backyard sheds and playsets and operates multiple outdoor brands.

What did unsecured creditors receive?

General unsecured claims were impaired and received no recovery under the plan. The remaining distributable value flowed to the prepetition secured party claims after payment of administrative, priority, DIP, and other secured claims.

Was this a prepackaged bankruptcy?

Yes. KidKraft filed a prepackaged plan and disclosure statement on the petition date with a restructuring support agreement executed by the lender, the majority shareholder, and the stalking horse bidder. The court confirmed the plan and approved the sale on June 24, 2024.

What happened to KidKraft's international operations?

The European, Pacific, and Asian operations were not part of the U.S. cases, and Canadian entities pursued a separate CCAA process in Canada.

How long did the chapter 11 process take?

The court entered the confirmation and sale orders on June 24, 2024, about 45 days after the May 10 filing. The sale closed in July 2024, consistent with the company's stated target to complete the transaction within roughly two months.

Who is the claims agent for KidKraft?

Stretto, Inc. serves as the claims, noticing, and solicitation agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.

For more bankruptcy case analyses and restructuring insights, visit ElevenFlo's bankruptcy blog.