What Shall Happen to WotC if Hasbro Declares Bankruptcy?
The Blind Eternities forum
Posted on Dec. 18, 2023, 5:53 p.m. by DemonDragonJ
WotC is a subsidiary of Hasbro, but I have heard that Hasbro has not been doing well, financially, recently, so I worry about what that shall mean for WotC and their properties.
Is Hasbro declares bankruptcy, all of their properties cease to exist, or will another company acquire them? If the latter occurs, I pray that any company other than the Walt Disney Company acquires them, since Disney already owns too many properties, in my mind. One potentially good thing about Hasbro declaring bankruptcy would be the end of the reserved list, although that would be a minor consolation compared to the loss of all of their various franchises.
What does everyone else say about this? What shall happen to WotC if Hasbro declares bankruptcy?
At this time, I do not think there is any reason to worry.
Bankruptcy is an extremely complicated field of law, and one often misunderstood by laypeople - I think some misunderstandings on your part might be the cause of your concern.
Big picture, there are two types of bankruptcy companies typically engage in - Chapter 7 Bankruptcy and Chapter 11 Bankruptcy.
Chapter 7 seems to be what you are thinking about - most of the company’s debts are written off, and their assets are sold to pay any remaining debts they have. This is the bankruptcy plan of last resort, used when you know there is no hope of the company’s survival. This is what Circuit City did.
Chapter 11 is the more common option for large companies. In a Chapter 11 proceeding, you get to restructure your debts to make them easier to pay. This could involve selling off assets, it could involve closing down departments, or it could involve just moving a bunch of numbers on a spreadsheet to make sure your debts are structured in a way that works for you moving forward.
Plenty of companies have gone through Chapter 11 and emerged on the other side - it is a fairly common (if not ideal or desired) business tool. Many of them even emerge and do not appear all that different, since the structuring was all financial and internal, and had little effect on the customer-facing side of the business.
Hasbro might be struggling, but they are not Chapter 7 struggling. If they file for bankruptcy - and it is very possible they would - they are all but certainly going to go under the more mundane Chapter 11.
What does that mean for Wizards? Hard to say for sure, but you can bet they will not simply cease to exist.
I also would be surprised if they were sold. As I said, Chapter 11 is about restructuring debts to make things easier to pay - that means you have to have something to pay with. Wizards is the golden goose of Hasbro, and Hasbro’s ability to keep paying their debts is dependent on Wizards continuing to make money.
That does not mean it is impossible for Wizards to be sold - Hasbro could, as part of their bankruptcy say “we are selling Wizards for a X dollars, so we can pay down our debts in other areas right away, even if that means we loose the long-term revenue from Wizards.” But that would surprise me - Hasbro has basically built their entire stock price around “hey, at least Wizards has growth!” so getting rid of Wizards would be torpedoing a large part of their draw.
Just a note, I don’t think bankruptcy would discharge the legal issues surrounding the RL. That is something Wizards promised, and, unless Wizards ceases to exist (which they won’t - they’re too valuable and someone will acquire them), and that is something Wizards is stuck with.
December 19, 2023 10:29 a.m. Edited.
Would it be possible for WotC to claim independence, if Hasbro somehow completely breaks down? (Not that I expect Hasbro to collapse, but I kind of get the completely uninformed impression WotC would prefer to be their own company again.)
December 19, 2023 3:18 p.m.
Hasbro made over $500 million in operating profit in 2022. For the first three quarters of this year they are at a $340 million loss. While that's a lot of money to a mortal human, it means far, far less to a big corporation like Hasbro. I think Hasbro would likely have to face losses like that for several years running to be at a risk of a chapter 11 bankruptcy and they did make a profit last year. Also, the Wizards of the Coast part of Hasbro has been making record profit. Hasbro would likely shed lower performing parts of itself before getting rid of WotC.
Honestly I think the biggest threat to the health of Magic is Hasbro trying to maximize profits from Wizards. If they push too hard (which I'd argue we've already seen signs of) then eventually things may break.
sergiodelrio says... #2
I shall buy WotC and bring havoc over the cardpool muahahaha.
But srsly. WotC can still exist in a post Hasbro world anyway. Why would that mean the end of the RL? I don't think it would.
When a company declares bankruptcy its assets do not vanish into nothingness. If WotC is profitable in a vacuum, it will likely continue to exist, possibly with a new owner. RL was a WotC idea imho, not a Hasbro idea.
Unless WotC is up for sale and someone buys it with the intent to make drastic changes, I don't see how anything substantially would change in the first place (again, assuming WotC by itself is profitable as-is).
If it aint broke, don't fix it... a new owner would look to collect $$$ with their freshly acquired company, so making random changes would be regarded as risky by an investor imho.
So TLDR - no changes (unless you sell WotC to me, muahaha)
December 19, 2023 10:25 a.m. Edited.