Well. On December 29, 2011, Maclaren USA, the premium umbrella stroller company, quietly filed for Chapter 7 bankruptcy in Connecticut. The company's US headquarters is in Norwalk, where its owner, private equity investor Farzad Rastegar, lives.

Chapter 7 is the kind of bankruptcy that ends in liquidation, not reorganization. It's the kind of thing that you'd think would be news, but no one has reported it. I've asked around, and no one--retailers, industry people, publicists--I spoke to even knew about it. Except the CPSC. They apparently knew about it, and they are getting back to me. Or seeing if they can.

So what is going on? Because Maclaren strollers are still rolling around and shipping and moving. Retailers I spoke to said they'd had regular, even heavy, business with the company right through the holiday season.

And yet, according to documents filed with the bankruptcy court, Maclaren USA, or technically, its parent company, American Baby Products, Inc., has almost no assets--under $60,000, including $13,000 in inventory and $12,000 in the bank, and well over $15 million in liabilities.

Even more remarkably, the company's revenue plummeted 99.5% last year. In 2010, American Baby Products had $20.4 million in revenue from "sale of goods." For the first nine months of 2011, that number was just $34,251. Maclaren had a widely publicized warehouse sale in October, but unless they're related to the uncharacterized revenue of $71,000 from corporate entities, Maclaren N.A., Inc. and Maclaren Services, Inc.,those sales figures were not credited to Maclaren USA.

Obviously, the company did not disappear in 2011. It still exists, and still makes, markets and sells strollers and other baby gear. But it's equally obvious that something is afoot, and that the Maclarens being sold in the USA are no longer being sold by Maclaren USA. Perhaps a look at the steep liabilities the company faces will be instructive.

First off, there are no secured creditors. No business- or operational debt such as securitized inventories or lines of credit. No mortgages or other loans. So the $15million+ is all from unsecured creditors. The first big claim: Dory Ventures, LLC: $897,000 for "services." Dory Ventures is Rastegar's private equity advisory company specializing in brand companies and restructuring. His standard bio, such as the one he gave to the advisory board for the Luxury Education Foundation, always pairs his two main gigs: "Farzad Rastegar is CEO of Maclaren USA Inc. He is also a Director of Dory Ventures LLC."

Rastegar is also listed personally as an unsecured creditor [for $113,000], as is Maclaren USA chairman Bahman Kia, in at least one creditor list [$100,000]. Even though their listed rents total less than $10,000/month, Maclaren's somehow on the hook to a cluster of real estate companies in Norwalk for at least $633,000. These companies all roll up to Excelsior Property Holdings, LLC, though, which is run by Rastegar.

The biggest creditor by far, to whom Maclaren USA/ABP owes $13.1 million, is the company's Chinese affiliate, Maclaren (HK) Limited. All told, Maclaren owes around $14.8 million to its affiliates, its owner, or companies owned by him.

But wait, there's more! Because Maclaren's biggest creditor who is not Maclaren or Rastegar is--David Netto. The $1.1 million owed to Netto Collection LLC is listed as a contingent claim, which could mean it's related to Mac's 2009 acquisition of Netto's nursery furniture line, or maybe it's related to his design consulting agreement, who knows. I contacted Netto, who would only confirm that he is, indeed, a creditor in the proceedings. [Interestingly, another "100% subsidiary" of ABP listed in the assets section of the filing, with about $13,000 cash and receivables, is 2 Fab 2 Design LLC, which holds some Netto-related trademarks. 2 Fab 2 has apparently filed separately for Ch. 7 liquidation. Maclaren's own intellectual property, from a sheaf of US trademarks to an EU patent application for a rotating stroller folding mechanism, is all held by an Antigua & Barbuda-based shell company called Armon Limited, which is administered out of Switzerland.]

And now is where it get really interesting. Because though there are several other creditors like insurance companies and utility companies with "unknown" claims, there are also seven parents and/or law firms, described as guardians of unnamed children who are currently involved in litigation against Maclaren USA.

Remember the Macopalypse 2009? When basically every Maclaren folding stroller sold since 1999, over a million total, was recalled because the folding mechanism was amputating baby fingers. [Though Maclaren's been around since the 1960s, the recall only went as far back as the company's current incarnation, from when Rastegar it out of bankruptcy from his own investment firm. Heyyy...] As of May 2011, the number of incidents and injuries/amputations reported to the CPSC had risen from 15 and 12 to 134 and 37. A quick look through the CPSC's safety reports database shows the reports keep coming, too, even though all the strollers since 2010 have a redesigned, closed hinge, and fixit kits for older models are super-easy and available.

So does Maclaren USA's bankruptcy have anything to do with the recall? Or with the ongoing potential liability for the 999,866 strollers out there? Or does it have something to do with the seven actual lawsuits the company's currently facing? All I know is, Chapter 7 bankruptcy specifically discharges almost every kind of liability Maclaren USA is facing:



lawsuit judgments



medical bills



unsecured business debts owed by a sole proprietor (such as debts to suppliers, consultants, and professionals like accountants or architects)



obligations under leases and contracts entered into by a sole proprietor (including commercial and residential property leases and leases to rent equipment), and



personal loans and promissory notes.



Whatever happens to Netto and the 90%+ of the claimed liabilities which are owed to itself and its owner, Maclaren USA would certainly do Rastegar a favor if it takes a decade-plus of recall- and product-related liabilities with it to its corporate grave.

But can it? That seems to me both totally plausible and totally bullshit. Which makes it interesting that last week, the US Attorney's office in Bridgeport notified the bankruptcy court that it will be monitoring Maclaren USA/ABP's case on behalf of the CPSC.

From the public-facing side of things, at least, Maclaren USA has already been replaced by Maclaren N.A. Which is wholly owned by Maclaren Europe, LTD, which, despite the name, is not who answered the EU's concerns about the 2009 US recall. That would be Maclaren (HK) [pdf].

I don't know the relevant law, but it seems extraordinary to me that the company could shift its US business operations around for a year or more, starve itself of revenue, and load itself up with debt--mostly to itself--solely as a way of dodging accountability to a small but growing population of nine-fingered toddlers and their parents. And yet that seems to be happening right in front of us. Stay tuned.