Model train maker Lionel LLC filed for Chapter 11 bankruptcy protection on Monday, citing a jury’s ruling that it must pay a rival for misappropriating designs.
A U.S. District Court jury in Detroit ruled Oct. 4 that Lionel and others must pay $40.8 million to Mike’s Train House Inc. Lionel is appealing the decision.
Mike’s Train House, based in Columbia, Md., sued Lionel in 2000, saying Lionel sold trains made from designs stolen from a South Korean manufacturer hired by Mike’s Train House.
The jury found that Lionel, along with its supplier Korea Brass Co. Ltd. and an individual, Yoo Chan Yang, earned millions of dollars by misusing designs that belonged to the Mike’s Train House.
Lionel chief executive Jerry Calabrese said the only reason for the filing is the legal case.
“Lionel is a sound company that enjoys healthy sales, growing demand for our products and the best brand and reputation in the business,” he said in a news release.
Lionel is based in Chesterfield Township, north of Detroit. It was founded in New York in 1900 as Lionel Manufacturing Co.