In the battle between the Cabbage Patch Kids and Anime hero Naruto Uzumaki, there could only be one winner. Or could there?
Listed toy wholesaler Funtastic, which distributes the popular kids' brands including Cabbage Patch Kids and Paw Patrol soft toys, has lost the majority of its legal battle against the new owners of its former subsidiary Madman Entertainment, the distributor of Anime merchandise and films.
![Cabbage Patch Kids are distributed by Funtastic](/web/20161204084011im_/http://www.theage.com.au/content/dam/images/g/q/l/l/i/r/image.related.articleLeadwide.620x349.gt1mwc.png/1480626551830.jpg)
Financially struggling Funtastic, which counts Gerry Harvey among its shareholders, sued the new owners late last year alleging it had been advised to sell the film distributor too cheaply.
Funtastic alleged it was owed $2.5 million as an adjustment to the $21.5 million price it agreed to sell Madman for in 2014.
![Leafa from Sword Art Online is a popular Anime character.](/web/20161204084011im_/http://www.theage.com.au/content/dam/images/g/h/j/b/g/9/image.related.articleLeadwide.620x349.gt1mwc.png/1480626551830.jpg)
This week the Supreme Court of Victoria found the independent accountant that helped determine the sale price of Madman back to its founding partners had not made a major error as alleged by Funtastic.
Justice Peter Almond also found the independent accountant may have made a manifest error in how they determined the revenue of Madman ahead of the sale.
As a result Justice Almond found Funtastic could be owed $268,666.33 and referred the matter to an expert for re-determination. .
Discount sale?
Funtastic sold Madman back to a company run by its founding partners Tim Anderson and Paul Wiegard in 2014. At the time of the sale, Mr Wiegard was a director of Funtastic but resigned once the deal was announced.
The sale price was well below the $52 million Funtastic had valued the business in the years ahead of the sale. As a result Funtastic booked impairments on the sale of the business of around $30 million.
Funtastic's most recent accounts show the company had a net asset deficiency of $17.1 million at June 30. It owes the National Australia Bank $48.9 million.
The company spent $421,000 in 2016 on running the case. Funtastic chief financial officer Grant Mackenzie said the company would consider appealing, but it was "early days".
"There are no material changes [to the accounts] from a reported point of view," Mr Mackenzie said.
"In our view [launching litigation] was the right thing to do. You do it because you believe in it," Mr Mackenzie said.
A spokesman for Madman said it was disappointed Funtastic had chosen to contest the independent review.
"We are pleased that the Supreme Court of Victoria's ruling has vindicated our position," the spokesman said.