Minnesota retailer Legacy Toys files for bankruptcy, but will try to keep remaining stores open

Minnesota toy retailer Legacy Toys, which started in Ely and expanded to the Twin Cities, filed for Chapter 11 bankruptcy protection after a series of financial blows.

Legacy, based in Edina, has closed three stores over the past 18 months, but it still has outlets in Ridgedale, Southdale, Rosedale and the Miller Hill and West Acres malls in Duluth and Fargo, respectively.

“It’s a lot of little things that added up to a big thing,” Legacy Toys’ owner and president Brad Ruoho said of the bankruptcy. Tariffs, while they didn’t cause the bankruptcy, “were the final straw” leading up to it.

Tho five stores left will remain open. Chapter 11 allows companies to reorganize financially while shielded from creditors’ claims and litigation.

“It’s a lot of little things that added up to a big thing,” Legacy Toys’ owner and president Brad Ruoho said of the bankruptcy. Tariffs, while they didn’t cause the bankruptcy, “were the final straw” leading up to it, he said.

The toy industry relies on China for most of its products. President Donald Trump has levied tariffs on Chinese imports that currently stand at 30%.

“A toy we used to spend $10 on now costs us about $30,” Ruoho said.

Legacy Toys launched its first store in 2012 in Ruoho’s hometown of Ely, Minn. The company then branched out to Duluth and Fargo in 2014 and 2015, respectively, before opening its first two Twin Cities stores in 2019.

Ruoho was partly inspired by the venerable Creative Kidstuff, which closed its six Twin Cities stores in 2019 after over 30 years in the toy business.

Legacy Toys has worked to create a fun, interactive atmosphere for kids, Ruoho said. “It’s not a big box store. We have lots of demos and you can play with things.”

In January 2024, Legacy Toys closed its Ely store. In August, the company shuttered its Mall of America outlet after losing an eviction suit.

MOAC Mall Holdings sued after Legacy Toys missed rent payments and allegedly violated its lease by opening a store within five miles of its MOA outlet.

Legacy Toys had moved from its original Edina location in the Galleria across the street to Southdale in 2023. The Galleria store had opened before Legacy Toys’ MOA outlet opened; the Southdale store after.

The toy store moved because it had only a temporary lease at Galleria, Ruoho said.

A Hennepin County judge sided with the Mall of America and handed down a $876,842 judgment against Legacy Toys, which hasn’t been paid.

The Mall of America outlet was Legacy Toys’ largest source of sales, Ruoho said.

After its closure, Legacy Toys’ revenue fell from $4.72 million in 2023 to $3.05 million last year, bankruptcy records show. So far in 2025, the company has $815,000 in sales.

Legacy Toys closed its Rochester location in March after less than two years in business.

“It just never took off,” Ruoho said. “We didn’t get the food traffic,” and the store suffered inordinately high theft losses.

Legacy Toys also does business online. But web sales make up only 10% of its revenue, and “there’s not a lot of [profit] margin,” Ruoho said.

Legacy Toys’ assets of $620,600 are outweighed by $1.79 million in liabilities, according to its bankruptcy filing.

Its largest creditor is listed as Bremer Bank, now known as Old National Bank, which is owed $1.1 million. About 56% of that debt is secured by Legacy Toys’ assets.

Legacy Toys also owes he U.S. Small Business Administration $499,000, an unsecured debt.

“We feel that given some time and little relief to get through this [bankruptcy], we can come out on the other side stronger,” Ruoho said.