Tooth Fairy of America (NYSE: TFA) announced today that it along with certain of its subsidiaries have filed voluntary petitions for Chapter 11 reorganization with the U.S. Bankruptcy Court for the Southern District of New York. As part of the reorganization process, Tooth Fairy of America also filed suit against Cuspids, Inc (NYSE: CSPID) in the same court, alleging breach of contract in connection with Cuspids’ wrongful termination of its proposed merger with Tooth Fairy of America and seeking damages of at least $10 billion. Proceeds from the lawsuit would benefit Tooth Fairy of America’s creditors.
In the filing, Tooth Fairy cited “unchecked price escalation” as a leading financial problem facing the company.
The CTFO (Chief Tooth Fairy Officer) explained the problems to EGI. “Forty years ago we were spending about 10 cents per tooth. Now children are demanding us to pay between 1 dollar and 10 dollars per tooth. Meanwhile, the price that we can resell teeth has gone from $0.80 a tooth to at most $4.00 per tooth. Our margins have disappeared completely, and in many cases we are operating at a loss.”
Cuspids, Inc announced in July their intention to purchase Tooth Fairy of America. Cuspids, Inc is the leading consumer of the teeth collected by the Tooth Fairy. The merger with Cuspids would have created a single source for collecting and processing used teeth.
A spokesperson from the White House told EGI, “The government may have to step in to keep Tooth Fairy flying. The people of this great country need Tooth Fairy and can’t be expected to pick up the effort and expense if Tooth Fairy did not exist.”