New York City-based entertainment and licensing company 4Kids Entertainment has filed for Chapter 11 bankruptcy protection. The filing comes after the global distributor failed to mend legal disputes with Asatsu-DK and TV Tokyo Corporation over the Yu-Gi-Oh! anime brand, which 4Kids represents in the US.

The bankruptcy filing covers all of the domestic wholly-owned 4Kids subsidiaries; however, 4Kids Entertainment International, the company’s subsidiary based in London, is not part of the filing.

4Kids filed a variety of first day motions that will allow the company to manage operations while exploring strategic alternatives, including the possible sale of the business or a corporate reorganization.

The bankruptcy filing automatically puts a hold to the lawsuit filed by the Yu-Gi-Oh! licensors on March 24 against 4Kids, which claimed US$4.7 million in damages.

4Kids has been struggling financially well before the March 24 letter from the licensors.  The company saw revenues of US$14.5 million in 2010 compared with US$34.2 million in 2009 and reported consecutive losses of US$27.2 million in 2010 and US$42.1 million in 2009.

The news also comes as the company looks to fill the void left by former chairman and CEO Alfred Kahn, who retired in January. Director Michael Goldstein has been acting as interim chairman of the company since Kahn’s departure. Under Kahn’s leadership, 4Kids served as the merchandise licensing agent for such properties as Nintendo, Pokémon, Cabbage Patch Kids and Teenage Mutant Ninja Turtles. The rights to the latter were sold to Nickelodeon in October 2009 for US$60 million.