GREENLAND – 2010 has seen no let up in economic hardship as Santa Incorporated, a not for profit operation aimed at young children, today filed for chapter 11 bankruptcy.
The struggling business, headed by Kris Kringle aka Santa Claus aka Saint Nicholas aka Father Christmas or just Santa, had seen tough times since the recession took full grip on small businesses everywhere.
A substantial number of toy recalls also had a detrimental effect on demand with trust in non-American made products at an all time low.
Despite this, Mr Kringle decided to continue trading for the holiday season on the hopes of large Elmo Live, and other popular toy demand, but the cost of reindeer operation proved too great.
Mr Kringle was described as distraught after being forced to close shop and now begins the search for a buyer to take over operations at the Greenland facility. Both Chinese and Arabian consortiums are said to be interested in continuing Christmas.
Our business correspondent is in Greenland with more.
[Chief Correspondent] Richard, this is a sad time for children and toy lovers everywhere.
[Business Correspondent] Yes, I’m outside the workshop where Santa’s elves are packing their belongings after wholesale redundancies.
[Chief Correspondent] Yes, tragic. What does chapter 11 mean here?
[Business Correspondent] Santa became what is known to his creditors as a ‘delinquent’. Unable to remain solvent, his corporation must restructure under new ownership to survive.
[Chief Correspondent] How did it come to this Rich?
[Business Correspondent] Simply the harsh realities of the economic conditions we find ourselves in. Internet sales had seen demand for Santa branded merchandise fall in recent years, and of course the recession.
[Chief Correspondent] There were reports that Mr Kringle was involved in mortgage-backed securities that took such a hit in 2007?
[Business Correspondent] There had been strong speculation that his investments in the ill-fated investment derivatives allowed him to fund an operation which generated no discernible revenue. Santa himself declined to comment.
[Chief Correspondent] What are economists saying?
[Business Correspondent] The main criticism has been of the business model, which has been described as a ‘time bomb’. Santa only conducted business one day a year and gave his primary asset away for free…to children. This was simply not sustainable.
[Chief Correspondent] Not to the mention the elves.
[Business Correspondent] Of course. The elves were paid yearly salaries despite working for only one month. Many came to work in Ferrari’s and Hummers. Add the cost of health coverage and it’s a wonder we’re not here sooner.
[Chief Correspondent] Not so must a business model as a one way ticket to the unemployment line. Could this have been avoided?
[Business Correspondent] Charging children for the toys would have been a start and would have bought some much needed cashflow.
[Chief Correspondent] I see…
[Business Correspondent] And diversification. Santa Inc only provide children’s toys. One vertical is just not going to cut it in today’s market. Even Starbucks diversified into coffee.
[Business Correspondent] I’m afraid so. The only option is to find a suitable buyer to take over operations.
[Chief Correspondent] What of the front-runners?
[Business Correspondent] The most likely buyers are a consortium from China, ‘Happy Fun Toys’ who will use the facility to mass produce toys.
[Chief Correspondent] And Mr Kringle himself? Will he be able to re-enter the workforce?
[Business Correspondent] He should find himself well suited. His experience in last minutes deliveries would suit him well for work at UPS or even FedEx.
[Chief Correspondent] He would also be perfectly suited to play a mall Santa?
[Business Correspondent] Indeed. There are no lack of opportunities for him…It’s the elves I’m worried about.
[Chief Correspondent] So will there be a Christmas next year?
[Business Correspondent] Certainly. Once the facility is taken over by Happy Fun Toys, we should get a Christmas fit for the 21st century.
[Chief Correspondent] One run for profit and driven by cheap Chinese labour?
[Business Correspondent] Exactly as it should be.
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