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Maclaren USA folds in Chapter 7 bankruptcy

A popular baby furniture and stroller maker that many New Yorkers have likely used -- and that claims it invented the first umbrella baby stroller four decades ago -- filed for bankruptcy recently. Maclaren USA, a company plagued by baby-injury lawsuits and a massive product recall in 2009, filed for Chapter 7 bankruptcy protection without attracting attention until recently.

The overlooked Chapter 7 filing in U.S. Bankruptcy Court occurred on Dec. 29, 2011. The petition surfaced on a new-parents' blog in late February. The news spread quickly to widely read bankruptcy reports.

Instead of a Chapter 11 filing, which would have allowed the company to reorganize, Maclaren is liquidating. Court papers show the company's sales income dropped from a healthy $20.4 million in 2010, one year after a devastating recall, to less than $35,000 last year.

The company suffered when Maclaren strollers were found to cause injuries to children. Approximately 1 million Maclaren strollers were recalled after faulty hinges severed the fingers of a dozen children. The news was followed by a Consumer Product Safety Commission warning for parents to abandon the use of any Maclaren strollers purchased in the previous decade.

Lawsuits that resulted from the recall appear to remain unresolved. The names of nine parents whose babies were injured are listed in the bankruptcy petition as some of the company's priority creditors. Seven stroller injury cases are pending, according to the filing. The CPSC was also investigating the company.

The largest creditor listed in the bankruptcy filing is Maclaren (HK) Limited in China. The subsidiary is due more than $13 million of Maclaren USA's total liability claim of $15.9 million.

Maclaren strollers are still available for purchase from several online retailers.

Source: The Wall Street Journal, "Maclaren U.S. Unit's Bankruptcy Flies Under Radar," Stephanie Gleason, Mar. 2, 2012

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