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The advertising agency for Toysmart.com is suing the bankrupt toy retailer’s behemoth backer, Walt Disney, for $2.5 million, which it says it is owed for media buys during the last holiday season. Arnold Communications filed the suit last week in Superior Court in Boston. The ad agency, based in Boston, says it spent $2.5 million on advertisements in various media outlets, helping Toysmart become the 24th most visited site by last Christmas. Disney spokesperson Michelle Bergman declined to comment on the lawsuit. The suit is the latest twist in the Toysmart bankruptcy case. The company ceased operations in May and filed for Chapter 11 bankruptcy in June. Earlier this summer, the toy retailer drew objections from the Federal Trade Commission and some attorneys general after it tried to sell its customer lists, despite a privacy policy that maintained the company would not share customer information. Last month, a federal bankruptcy judge set aside the FTC’s plan to limit the sale of the customer database — a move that some creditors endorsed. Arnold Communications is among Toysmart’s creditors. But Erik Lund, the attorney representing Arnold, acknowledges that “Toysmart is in bankruptcy, and there isn’t much there.” The ad agency says it bent its rules for Toysmart because of Toysmart’s well-heeled backer. Arnold typically requires clients to pay for a media buy at least 30 days in advance of the run date, to ensure that Arnold has enough time to cancel the buy at no cost should the client not pay. But Arnold waived that rule for Toysmart and paid the bills because it was led to believe that Disney would pay, the ad agency states in its complaint. The suit, which also names four Disney officials, charges that the defendants embarked on an expensive ad campaign at a time when they knew Toysmart could not pay if its sales did not dramatically increase. Copyright (c)2000 The Industry Standard

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